On 30 June 2020, the Beijing social insurance authority released a strict local policy to tighten its social insurance administration in Beijing. Pursuant to this policy, effective from 5 July 2020, all HR agencies registered in Beijing are no longer allowed to pay social insurance in Beijing for employees who are hired by companies registered in other cities or dispatch employees to companies registered in other cities (local transition periods may apply though). Now, the government requires the HR agencies to stop the affected services, conduct internal review and take corrective actions.
The policy is not a change of social insurance law, but a signal for the stricter implementation of law. In the past, the employees based in Beijing may want to pay social insurances in Beijing to meet the criteria stipulated for household registration, house buying, etc. Many HR agencies are able to pay social insurance for those employees in Beijing on behalf of the companies, without considering whether those companies have legal registration in Beijing. Although this may not be fully compliant with the social insurance law, it has been tolerated by many social insurance authorities for rather a long time.
In view of the above, we suggest you have an internal review to know whether you are affected by the above policy. If the above policy applies to you, it is critical to find alternative solutions for your employees based in Beijing as soon as possible. Failing to do so may cause disruption to social insurance and tax filing for the affected employees and may lead to high risks in tax and social insurance compliance in China.
Please feel free to contact us if you need further information or assistance.
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Yvonne Zhang
