Now! China - Navigating Global Payroll: Best Practices and Insights [Issue No.31]

In 2023-2024, Chinese enterprises have accelerated their pace of globalisation, facing complex challenges in international payroll management. Effective global payroll management is crucial for employee satisfaction, corporate competitiveness, and the compliance and efficiency of cross-border operations. In the ever-changing international environment, a well-structured compensation strategy is key to attracting and retaining global talent, thereby achieving sustainable development for enterprises. This article discusses insights into global payroll management from three aspects: compliance considerations, localisation experience, and information technology.

Compliance Considerations

Firstly, ensuring compliance in global payroll management involves several key areas such as laws and regulations, data protection, audit preparation, labour rights protection, and cross-border payments. Each of these areas has an extensive policy framework requiring cross-border collaboration and real-time updates to policies and processes to maintain continuous compliance.

By thoroughly addressing these aspects, enterprises can manage global payroll more comprehensively, reduce legal risks, and maintain their corporate reputation. Moreover, fostering a corporate culture centered on compliance, where adherence to regulations becomes second nature for employees and the organisation, creates a conducive environment for the healthy development of the enterprise.

Localisation Experience

Secondly, in global payroll management, respecting cross-cultural differences is crucial for effective employee management. Understanding the business culture and work habits of different countries and regions helps to better manage employees, enhance performance, and promote the healthy growth of corporate business. Through our global accounting firm alliance network, we can help clients quickly connect with compliance professional teams worldwide. By working closely with local professionals, we gain in-depth insights into the compliance requirements, cultural differences, compensation structures, best practices, and risk management in various regions.

We provide clients with first-hand compliance information and professional advice to ensure they comply with local laws and regulations during global expansion, avoiding potential legal risks and fines. We assist clients in customising reasonable compensation structures based on local economic conditions and industry standards, continuously monitor economic and policy changes, assessing their potential impact on payroll management, and providing forward-looking risk assessments and management strategies to address uncertainties.

Our global payroll management team, with a network of professionals from around the world including China and Singapore, combines local expertise with international reach to ensure consistent, localised payroll management, enhancing employee satisfaction and corporate competitiveness.

Information Technology

Finally, in the era of informatisation, strong compliance technology is indispensable for enhancing corporate competitiveness and improving organisational efficiency. We provide enterprises with a global payroll management technology platform that integrates global payroll data, ensuring unified management and access to payroll information for global employees.

The platform connects with payroll suppliers’ data worldwide, allowing enterprises to access real-time payroll information, make data-based decisions quickly, and improve response speed and business agility. Based on clients’ needs, we also offer data analysis tools and customised reporting functions, enabling in-depth payroll data analysis and compensation structure optimisation. Employees can access their payroll information for inquiries and updates, enhancing satisfaction and participation.

The platform includes built-in risk assessment and management tools to help identify and mitigate potential risks in payroll management. Additionally, the platform is flexible and scalable, adapting to the changing size and business needs of the enterprise in the global market. Through the global payroll management technology platform, enterprises achieve transparent, standardised, and automated global payroll management, thereby improving efficiency and effectiveness on a global scale.

China Updates

Accounting and Taxation

• Announcement on Adjusting the Technical Requirements for Energy-Saving and New Energy Vehicle Products enjoying Vehicle and Ship Tax Preferential Treatment (2024) 

To adapt to the development and technological progress of the energy-saving and new energy vehicle industry, and to promote energy conservation and the use of new energy, the Ministry of Finance, the State Administration of Taxation, the Ministry of Industry and Information Technology, and the Ministry of Transport announced updated technical requirements for energy-saving and new energy vehicle products that qualify for vehicle and vessel tax preferential policies on 27 May 2024.

• Announcement on Tax Preferential Policies for Enterprises Undertaking Commodity Reserve Business in Shanghai 

On 2 April 2024, the Shanghai Municipal Finance Bureau and the Shanghai Municipal Tax Service, State Taxation Administration, issued an announcement effective from 1 January 2024 to 31 December 2027.

• Enterprises entrusted by relevant government departments of Shanghai to manage reserves of grains (including soybeans), edible oil, cotton, sugar and meat are exempted from stamp duty, property tax, and urban land use tax.
• To benefit from these tax incentives, enterprises shall apply for tax exemption declarations to the competent tax authorities and keep the following information for reference:

1. Entrustment agreement with government departments to undertake reserve tasks;
2. Administrative documents, relevant agreements, or vouchers for financial reserve funding or subsidies;
3. Real estate and land ownership certificates and other relevant materials; and
4. Commodity business or construction planning and other relevant information.

Human Resources

• On 13 June 2024, the Shanghai Municipal Bureau of Human Resources and Social Security issued Several Measures to improve the Skill Levels of College Graduates and Promote High-Quality Full Employment.

The new policy aims to deepen the reform of the skills evaluation system and promote the implementation of the "academic certificate + several vocational skills certificates" system to enhance the employability and adaptability of college graduates. Specific measures include supporting universities in independently conducting skills evaluations, encouraging the provision of social evaluation services, exploring the reform of skills training evaluation models, and increasing subsidy policy support. Additionally, the policy will incorporate the vocational skill level certificate into the employment settlement policy, strengthen support for talent introduction, and enhance incentives and assessments to boost the motivation for skill training among college graduates.

Corporate Governance

• On 31 May 2024, the Beijing Regulation on Foreign Investment (the “Regulation”) was promulgated by the Standing Committee of Beijing Municipal People's Congress.

As the first special regulation on foreign investment in the capital city, it aims to create a more transparent and predictable market environment for foreign investment. The Regulation consists of 44 articles in seven chapters, addressing policy making, government procurement, fulfillment of government promises, cross-border data flow, foreign exchange facilitation, intellectual property right protection, introduction of technical talent, and government-enterprise communication mechanism.

The Regulation explicitly stipulates that Beijing will implement the pre-establishment national treatment plus a negative list management system for foreign investment, establish an identity authentication and verification mechanism for foreign investors, and create a mutual recognition mechanism for entity qualifications across regions so as to enable the online handling of the entire registration process. The city will facilitate qualified foreign investors in conducting outbound security assessments of important data and personal information and explore creating a list of general data that can flow freely. The free trade zone in the city may prepare a list of important data subject to outbound transfer management according to the law.

The Regulation also encourages foreign-funded enterprises to reinvest their profits by implementing supporting policies equivalent to those for newly added foreign investment. For reinvestment made by foreign investors using profits earned in mainland China, the city will temporarily exempt withholding income tax according to national rules. Project reinvested by foreign-funded enterprises that meet the requirements of the national Catalogue of Industries for Encouraged Foreign Investment will enjoy duty-free policies for imported self-use equipment according to applicable national rules.

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