Question 1

What are the Five Insurances and One Fund in China?

Accepted Answer

The 'Five Insurances and One Fund' (wu xian yi jin) comprise: pension insurance (employee ~8%), medical insurance (employee ~2%), unemployment insurance (employee ~0.5%), work injury insurance (employer only, 0.2%-1.9%), maternity insurance (employer only, ~0.5%-1%), and the Housing Provident Fund (typically 5%-12% each for employee and employer). Exact rates vary significantly by city.

Question 2

How is Individual Income Tax (IIT) calculated in China?

Accepted Answer

Since 2019, China uses a cumulative withholding method for employment income. There is a standard deduction of CNY 5,000/month (CNY 60,000/year), plus additional special deductions for children's education, continuing education, housing loan interest or rent, elderly care, and infant care. Progressive tax rates range from 3% to 45% applied to cumulative taxable income throughout the year.

Question 3

Do social insurance contribution rates differ between Chinese cities?

Accepted Answer

Yes, social insurance contribution rates and base amounts vary significantly by city and province. Each city sets its own minimum and maximum contribution bases (typically 60%-300% of the local average salary) and may have slightly different rates. For example, the Housing Provident Fund rate can range from 5% to 12% at the employer's discretion within the local permitted range.

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