What is the impact of the social insurance contribution for foreign employees in Shanghai when calculating the Individual Income Tax?

If foreign employees in Shanghai are no longer exempted from social insurance contributions, the labor cost for the employer, the IIT liability, the employee’s take-home salary amount will be impacted, respectively.

In China, social insurance premiums contributed by the employee following the scope and standard stipulated by relevant laws and regulations are regarded as special deductions that can be deducted from the gross salary when calculating the Individual Income Tax (IIT) liabilities.

In this case, if foreign employees are to be included in the social insurance schemes, the contribution paid by employees themselves could be deducted from the taxable income when calculating IIT.

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