European Chamber of Commerce urges Beijing to extend expat employee tax breaks for housing, education amid fears of exodus of talent

Name: Fewer jobs and less pay: Chinese migrant workers continue to face uncertainty after country reopens
Uploaded: 2023-07-10T03:26:32.000Z
Duration: 3 min 51 s
Description: Fewer jobs and less pay: Chinese migrant workers continue to face uncertainty after country reopens

It is estimated that a foreign company would pay an extra US$110,800 in taxes for a foreign employee with two children if the exemptions were scrapped

‘The Chinese government is advised to address the matter as early as possible to retain foreign professionals,’ says recruitment consultant

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The European Chamber of Commerce in China is lobbying Beijing to extend tax exemptions on a range of employee benefits. Photo: Bloomberg

Daniel Renin Shanghai

Published: 11:26am, 10 Jul 2023

The European Chamber of Commerce (EUCham) in China is lobbying Beijing to extend tax exemptions on a range of employee benefits such as housing and children’s education amid fears their expiry could exacerbate an exodus of foreign talent.

At the end of 2018, China announced that tax breaks for certain expatriate allowances would be phased out by the beginning of 2022. Under pressure from multinational companies, the government made a last-minute decision in late 2021 to extend the exemptions for two more years.

It is estimated that a foreign company would have to pay an extra 800,000 yuan (US$110,800) in taxes for a foreign employee with two children if the exemptions were scrapped.

Some European companies may choose to reduce their headcount in mainland China if Beijing refuses to retain the policy, according to Carlo Diego D’Andrea, vice-president of the EUCham in China and chairman of its Shanghai chapter.

“As the extension will expire at the end of this year, the European Chamber has continued to advocate for the continuation of this policy at both a central and local level,” he told the Post. “Foreign investors would likely reconsider or significantly reduce the number of cross-border assignments to China due to the additional financial burden.”

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Fewer jobs and less pay: Chinese migrant workers continue to face uncertainty after country reopens

He said the business lobby group had sent a letter to China’s Ministry of Finance in May, urging it to consider the EUCham’s recommendations.