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Outsourced Payroll Services in China
There is no national payroll rate in China — there is one calculation per city
China is the hardest payroll in this matrix, and it is worth saying why before anything else. 五险一金 — five insurances and one fund — is set by each municipality, not by Beijing on behalf of the country. Employer contributions run 30.7%–34.4% of the contribution base in Shanghai and 31.5%–40.2% in Beijing, on different bases, with different housing fund bands and different annual reset dates. A company paying staff in three cities is running three payrolls that happen to share a payment date. On top of that sits individual income tax, withheld monthly on a cumulative basis at 3%–45%.
The second question decides everything else: do you have a Chinese entity? If you do, Aniday's partner entity in China runs payroll for that entity directly and there are no headcount limits to work around. If you do not, the only compliant route is labour dispatch (劳务派遣) through a licensed agency — capped at 10% of headcount and limited to temporary, auxiliary and substitute roles. Both cases are set out below, honestly. See also employing staff in China and the China work permit guide.
China payroll snapshot
What outsourced payroll in China covers
Outsourced payroll in China means handing the monthly cycle — gross-to-net calculation, 五险一金 contributions at the rates and bases in force in each employee's city, cumulative individual income tax withholding, payslips, salary payment in RMB and the municipal and tax filings that follow — to a provider that is registered in the cities where your people sit. Aniday's partner entity in China runs that cycle for your employees. It does not replace your entity: who legally employs the person is a separate question, answered further down this page.
Why companies hand China payroll over
One calculation per city, kept current
Rates, contribution bases, floors and ceilings are municipal and they reset annually. We hold a separate profile for every city on your payroll rather than applying one rate to the country.
Monthly 五险一金 and IIT filings
Social insurance and housing fund declarations in each municipality, plus individual income tax withholding filings on the cumulative method, filed on time every cycle.
Foreign employees handled on the facts
Contributions for foreign staff are mandatory. We check whether a bilateral totalisation agreement applies and whether a certificate of coverage has actually been filed before any exemption is applied.
One report your head office can read
City-by-city employer cost consolidated into a single monthly view, so a finance team outside China can see what a Chinese headcount actually costs without reading municipal schedules.
五险一金 — what employer and employee actually pay
Five insurances and one fund: pension, medical (including maternity), unemployment, work injury, and the housing provident fund. Rates and contribution bases are set by each municipality. The two cities below are the ones most often on a foreign company's payroll; a third city means a third set of numbers.
| Component | Shanghai — employer | Shanghai — employee | Beijing — employer |
|---|---|---|---|
| Pension | 16% | 8% | 16% |
| Medical, including maternity | 9% | 2% | 9.8% |
| Unemployment | 0.5% | 0.5% | 0.5% |
| Work injury | 0.2%–1.9%, rated by industry | None | 0.2%–1.9%, rated by industry |
| Housing provident fund | 5%–7%, the employer elects the rate | 5%–7%, matching the employer's election | 5%–12% |
| Total | 30.7%–34.4% | 15.5%–17.5% | 31.5%–40.2% |
| Contribution base | Through June 2026: ceiling RMB 37,302, social insurance floor RMB 7,460, housing fund floor RMB 2,690 | The same base as the employer side | Set from the prior calendar year's average monthly wage, with a municipal floor and ceiling |
Read the totals as ranges, not as a single number to budget against. The width of the Shanghai range is the work injury rating and the housing fund election; the width of the Beijing range is mostly the housing fund, which runs to 12%. And read the base as the other half of the cost: a salary above the ceiling stops adding contributions, a salary below the floor is still charged at the floor. That is why two employees on the same salary in two cities cost different amounts, and why a rate table alone never answers the budget question.
Sources. Social insurance and housing fund rates, contribution bases, floors and ceilings from the Shanghai and Beijing municipal schedules, administered under the Social Insurance Law by the Ministry of Human Resources and Social Security and the municipal human resources and social security bureaux; the Shanghai base ceiling of RMB 37,302, social insurance floor of RMB 7,460 and housing fund floor of RMB 2,690 apply through June 2026. Beijing employee-side rates are not published here. Last verified 2026-09.
Individual income tax, and what changes for a foreign employee
The second half of a Chinese payslip. Withholding is cumulative, so the rate an employee sees moves upward through the year rather than staying flat month to month.
| Topic | Position in China |
|---|---|
| Withholding method | Employment income is withheld monthly on a cumulative basis at progressive rates of 3%–45%. Each month's withholding is the tax due on income earned so far in the year, less what has already been withheld — so an employee's effective rate climbs as cumulative income crosses each band. |
| Standard deduction | An annual standard deduction of RMB 60,000 is applied across the year in the cumulative calculation. |
| Employment income vs service income | Payments to a genuine independent provider are 劳务报酬 (labour remuneration), not employment income, and are withheld differently — interim withholding at 20% on the amount above RMB 4,000 after a 20% expense deduction, or 20% on the balance after an RMB 800 deduction for smaller payments, reconciled into comprehensive income at year end. If you are paying individuals that way, see Contractor of Record in China. |
| Foreign employees — the rule | Social insurance contributions for foreign employees are mandatory. This is the single most common mistake on a foreign-staffed China payroll: assuming a non-Chinese passport means no contributions. |
| Foreign employees — the exemption | Pension and unemployment can be exempted only where a bilateral social security (totalisation) agreement applies and a certificate of coverage has been filed. Both conditions, not one. Medical, work injury and maternity generally remain payable even where the exemption applies. |
| Foreign employees — housing fund | Housing fund eligibility for foreign employees varies by city, which is another reason the city profile, not the country, drives the calculation. |
| Work permits | Only a legal entity that directly employs the person, holds a Chinese business licence and has the role inside its registered business scope can sponsor a foreigner's work permit. Labour dispatch cannot be used to sponsor core foreign hires. The China work permit guide sets out the Category A / B / C points scale and the Notification Letter, Z visa, work permit and residence permit sequence. |
Sources. Cumulative withholding at 3%–45%, the RMB 60,000 annual standard deduction and the 劳务报酬 withholding rules from the State Taxation Administration; the foreign-employee contribution position, totalisation agreements and certificates of coverage from the Ministry of Human Resources and Social Security; work permit sponsorship as published on Aniday's China work permit guide. Last verified 2026-09.
How the payroll cycle runs in China
Three steps, and the first one is where China differs: before anything is calculated, every employee has to be tied to a city.
Inputs and city profiles
Attendance, leave, overtime, joiners and leavers, bonuses, commissions and reimbursements, plus each employee's contribution city, contribution base and housing fund election. Bases reset annually and a base set in one city does not carry to another.
Gross-to-net, city by city
Employer and employee 五险一金 at the rates in force in that municipality, against that city's floor and ceiling; cumulative individual income tax withholding at 3%–45% with the RMB 60,000 annual standard deduction; and a check of each foreign employee's totalisation position before payment.
Payment, filings and records
Salaries paid in RMB, payslips issued, monthly social insurance and housing fund declarations made in each municipality and individual income tax withholding filed, with records kept for the annual reconciliation and for any municipal base adjustment.
Your own WFOE, or no Chinese entity at all — the two cases
This is the question every buyer actually has, so here it is without the marketing layer. Payroll outsourcing and entity-free employment are not the same product, and in China the difference is statutory rather than commercial.
| You have a WFOE or other Chinese entity | You have no Chinese entity | |
|---|---|---|
| Who employs the person | Your Chinese entity, under a direct 劳动合同 | A licensed labour dispatch agency (劳务派遣), which assigns the worker to you |
| What Aniday does | Aniday's partner entity in China runs payroll for your entity directly — calculation, contributions, withholding, payslips and municipal filings in your entity's name | Payroll runs inside the dispatch arrangement, and the agency carries the employer obligations; Aniday coordinates the cycle and the reporting back to you |
| Headcount limit | None. Any number of employees, any role, any city where the entity can register | Dispatched headcount must not exceed 10% of the total workforce |
| Which roles are allowed | Any role inside the entity's registered business scope | Only 临时性 temporary (no more than 6 months), 辅助性 auxiliary (supporting, not core business) and 替代性 substitute (covering an absent regular employee) positions |
| Other statutory limits | Entity set-up, registered business scope and ongoing corporate filings are yours | The agency must hold a 劳务派遣经营许可证, and its labour contract with the worker must run at least 2 years. A representative office cannot hire staff directly at all and must engage staff through a dispatch or HR service agency |
| Work permit for a foreign hire | Yes, where the role sits inside the registered business scope | No — dispatch cannot be used to sponsor core foreign hires |
| Honest fit | Core, permanent, full-headcount operations — and the case where payroll outsourcing does the most work for the least friction | A pilot team, a support function, or a bridge while a WFOE is being set up. Not a substitute for an entity when the operation is core and permanent |
If a provider tells you that you can put an unlimited Chinese headcount on their books without an entity and without dispatch, that is not a better product — it is the same product described inaccurately. The 10% cap and the temporary, auxiliary and substitute test are in the Interim Provisions, and they apply to whoever is doing the dispatching.
Sources. The Interim Provisions on Labour Dispatch, adopted at the 21st executive meeting of the Ministry of Human Resources and Social Security and effective 1 March 2013 — the 10% headcount cap, the 临时性 / 辅助性 / 替代性 test with the 6-month limit on temporary positions, the 2-year minimum labour contract and the 劳务派遣经营许可证 licensing requirement; the position of representative offices from the same framework. Last verified 2026-09.
Client Reviews
Aniday supports 5,000+ companies across Asia. Read why teams trust us with payroll in markets where the rules change by city.
Outsourced Payroll in China FAQs
Is there a single national payroll cost for China?
No. 五险一金 rates and contribution bases are set city by city, not nationally. Shanghai employer contributions run 30.7%–34.4% and employee contributions 15.5%–17.5%; Beijing employer contributions run 31.5%–40.2%. A company paying staff in three cities is running three different calculations, and the bases reset annually.
What does an employer actually pay on top of salary in Shanghai?
Pension 16%, medical including maternity 9%, unemployment 0.5%, work injury 0.2%–1.9% rated by industry, and the housing fund at 5%–7% at the employer's election — 30.7%–34.4% in total. Through June 2026 the contribution base ceiling is RMB 37,302, the social insurance floor is RMB 7,460 and the housing fund floor is RMB 2,690.
How is individual income tax withheld from a Chinese payroll?
Employment income is withheld monthly on a cumulative basis at progressive rates of 3%–45%, against an annual standard deduction of RMB 60,000. Because the method is cumulative, an employee's effective rate rises through the year as cumulative income crosses each band, and the position is reconciled at year end.
Do foreign employees have to be in the social insurance system?
Yes — contributions are mandatory for foreign employees. Pension and unemployment can be exempted only where a bilateral social security (totalisation) agreement applies and a certificate of coverage has been filed. Medical, work injury and maternity generally remain payable, and housing fund eligibility for foreigners varies by city.
Can Aniday run our China payroll if we have no Chinese entity?
Only through labour dispatch (劳务派遣) with a licensed agency, and within its limits: dispatched headcount must not exceed 10% of the total workforce, and dispatched workers may only fill temporary (no more than 6 months), auxiliary or substitute positions. A representative office cannot hire staff directly at all. Where you do have a WFOE, Aniday's partner entity in China runs payroll for that entity directly and none of those limits apply.
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