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China Hiring employees in China can create tax, employment, social insurance and data compliance obligations that foreign-invested enterprises may overlook when entering the market. Employers must withhold individual income tax and make locally determined social insurance and housing fund contributions, while ensuring compensation is correctly characterised for tax purposes. Different rules across cities and provinces can add further complexity. Compliance also extends beyond payroll. Employment arrangements can create transfer pricing considerations where roles serve group entities beyond the Chinese operation, while the Personal Information Protection Law places strict requirements on employee data, including information transferred to overseas headquarters or integrated global HR systems. Consistent records across employment contracts, payroll, tax filings, statutory
contributions and accounting are essential, as discrepancies can surface during inspections or audits. China Briefing from Dezan Shira & Associates examines the key compliance considerations for FIEs hiring employees in China. Thailand A representative office in Thailand can generally operate without taxable income when it remains within its permitted support activities and is funded by its overseas head office. These activities can include sourcing information, checking goods, supporting the head office’s products and reporting on local business developments. The office cannot accept orders,
negotiate or conclude sales, or otherwise undertake revenue-generating activities in Thailand. Crossing that boundary can create Thai corporate income tax exposure, even where contracts are signed or invoices issued outside Thailand. A tax treaty may also affect the position, depending on the foreign company’s home jurisdiction and whether the activities create a permanent establishment. Representative offices must still obtain a tax identification number and submit income tax returns and audited financial statements, even where no taxable income is reported. Dezan Shira’s ASEAN Briefing details the tax and compliance considerations.
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ISSUE 28 GLOBAL PAYROLL MAGAZINE
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