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Mandatory State Insurance Contributions Set to be Reduced

Contributions are to be reduced to pension insurance, medical insurance, unemployment insurance, work-related injury insurance, maternity insurance and the housing provident fund (known as the “five insurances and one fund”), while other labour costs are also in line to be cut. The move has been jointly announced by the National Development and Reform Commission and three other ministries as part of a wider commitment to cutting back on taxes and fees. As outlined in the recently-issued Circular on Effectively Completing Key Tasks to Reduce Costs in 2017, these measures are intended to deepen institutional reform and reduce the cost of institutional transactions, while also cutting back on energy consumption and logistic costs.

Overall, the reforms extend to 25 taxes and fees across eight major sectors, including the lowered contribution rates to the “five insurances and one fund”. The aim is to steadily reform the pension insurance system in particular, allowing provinces, as well as autonomous regions and municipalities, with a 1.5% overall premium rate of unemployment insurance to incrementally reduce that rate to 1%.

For further details (in Chinese), please refer to the following website:

Circular on Effectively Completing Key Tasks to Reduce Costs in 2017 (Fa Gai Yun Xing No. 1139 [2017])

Content provided by Picture: HKTDC Research
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