How do foreigners make salary payments in China while staying compliant and ensuring employees get paid on time? 

Foreigners making salary payments in China must comply with Chinese labor laws, use approved banking channels, and properly declare and withhold taxes. 

The process usually involves setting up a Chinese business bank account, registering employees for social insurance, and following local payroll regulations. 

Failure to do so can lead to penalties, so understanding the right procedures is essential.

If you don't do it, itThis article breaks down the process, explores best practices, and answers the most common questions about payroll for foreigners in China.

Insights 💡

• ✅ Foreign employees in China must be paid in RMB (with rare exceptions).
• ✅ Employers must withhold individual income tax (IIT) before salary disbursement.
• ✅ Common payment methods: bank transfer, international payroll providers, or cash (limited cases).
• ✅ Social insurance contributions may apply depending on visa type and employment terms.
• ✅ Non-compliance can lead to fines, legal issues, or visa problems.

How Do Foreigners Make Salary Payments in China? Legal Framework

When a foreign business pays employees in China, it must follow specific laws. The system covers currency rules, tax, and social security. Failing to follow these requirements can cause legal or financial problems.

Must Foreigners Be Paid in RMB?

Most salaries in China must be paid in renminbi (RMB), the local currency. This is because of strict foreign exchange rules set by the government. Companies must pay both local and foreign employees in RMB, usually through direct bank transfers to a Chinese account.

There are a few exceptions. Some expats on special contracts may have part of their pay sent abroad in a foreign currency, but this is rare. To do this, employers must meet special requirements and get approval from authorities.

Key points:

• Standard practice: Salaries paid in RMB
• Payment method: Direct deposit to a local bank
• Foreign currency payment: Only possible in exceptional cases with approval

📌 Also Read: What is the Average Salary in China

Tax Obligations for Foreign Employees

All salaries paid in China are subject to individual income tax (IIT). The employer withholds this tax every month before the wage is paid. The rules for foreigners mostly match those for Chinese citizens.

Tax rates are progressive, ranging from 3% for lower incomes to 45% for the highest earners. Some expats receive exemptions if their country has a tax treaty with China or if their income comes from outside China. You must register and file tax information with the local tax bureau.

Social Insurance & Housing Fund Contributions

Foreigners working in China may need to pay into the country’s social insurance system. This depends on where you work and whether your home country has a bilateral agreement with China about social security.

There are several types of contributions:

• Pension
• Medical insurance
• Unemployment insurance
• Work injury insurance
• Maternity insurance

In some cities, you and your employer also pay the housing fund. Sometimes, expats are exempt because of international agreements. 

If you are not exempt, your company must make monthly payments on your behalf. Always check local rules because requirements can change from city to city.

📌 Also Read: China Taxation Rates 2025: Guide for Business Owners

How Do Foreigners Make Salary Payments in China: Payment Methods

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Foreign employers in China must follow specific rules when paying salaries to staff. The most common payment methods include bank transfers, international payroll services, cash in rare cases, and sometimes offshore payments for special situations.

Bank Transfers (Most Common Method)

Bank transfers are the standard way to pay salaries in China. You must set up a business bank account with a local Chinese bank. All employees must also have their bank accounts at a Chinese bank to get paid.

You must withhold and pay payroll taxes and social insurance as an employer. Most banks in China make this process straightforward with payroll systems. You can transfer salaries in Chinese yuan directly to your employees every month.

Key things to remember:

• You need official documentation for each employee.
• Payroll tax payments go along with each salary payment.
• Employees must receive printed pay slips showing taxes and deductions.
• The process works best for official, fully-registered staff.

International Payroll Providers

Many foreign companies use international payroll providers. These providers, like Deel, Remote, or ADP, help businesses comply with Chinese labor laws and tax rules.

You can use these services if you do not have a local legal entity or need help managing staff in different countries. Providers handle payroll calculations local tax payments, and even offer HR support.

Advantages:

• Easy compliance with local rules.
• Central management for teams in many countries.
• More support for setting up and terminating contracts.

Disadvantages:

• Higher costs due to service fees.
• Less direct control over banking.
• Sometimes limited payment options based on provider coverage.

International payroll providers are a safe way to ensure you follow China’s strict labor regulations.

Cash Payments (Limited Use Cases)

In modern China, paying salaries in cash is very rare. However, small businesses or informal jobs might still use cash for short-term workers or one-time payments.

However, there are risks:

• Cash payments often do not track payroll taxes.
• You can be fined or face legal problems for not reporting taxes correctly.
• Employees may not receive pay slips or written records.

The Chinese government does not encourage cash payments for salaries. Always use official methods unless you have no choice, and keep detailed records if you must pay in cash.

Offshore Salary Payments (Special Cases)

Some senior foreign staff may have part of their salary paid into offshore accounts, such as in Hong Kong or their home country. This method is usually used for high-level executives who travel often or work outside China.

You must make sure to:

• Keep detailed records showing where all payments go.
• Report all salary payments to Chinese tax authorities, including offshore amounts.
• Provide proper contracts and documentation for these special arrangements.

Not all employees qualify for offshore payments. You should check with payroll and tax experts before setting up this payment method to avoid problems with compliance or tax reporting.

Best Practices and Common Challenges for Foreign Employees

Managing salary payments for foreign employees in China requires close attention to regulations, communication, and reliable payment systems. Specific steps can help prevent legal or administrative problems and improve payroll efficiency.

Dealing with Bank Restrictions and Delays

Foreign employees often face bank account restrictions, such as limits on transferring funds abroad or additional verification checks. Banks sometimes require extra paperwork for international salaries, which can cause delays.

Dealing with these issues means preparing documents in advance. These may include a valid work permit, proof of employment, and sometimes tax records. Keep bank details updated and double-check them each time you arrange a transfer.

If you must send money out of China, learn the maximum amount allowed. Many banks have daily or annual transfer limits. Communicate clearly with your bank to understand their process and possible fees.

Tip:

• Compare banks to find one with easier procedures for foreigners.
• Maintain a written record of all communications with the bank for reference.

📌 Also Read: Can I Open a Bank Account in China as a Foreigner? [A Full Guide]

Ensuring Employee Satisfaction and Transparency

Regular, timely payments help maintain trust with foreign staff. Issue clear, accurate payslips every pay period. Payslips should include details like base pay, bonuses, deductions, and paid leave.

Set up easy-to-follow channels for employees to ask questions about their salary. Respond to questions or issues quickly. This can prevent small misunderstandings from becoming bigger disputes.

Checklist for employee satisfaction:

• Ensure employees always get their pay on time.
• Provide detailed payslips in both Chinese and English if possible.
• Clearly explain how salaries are calculated and what deductions are made.

Open communication about payroll builds confidence and reduces the risk of complaints.

Using Payroll Outsourcing Services in China

Payroll outsourcing is a practical option if your company is not familiar with Chinese payroll regulations. These services can handle tax filings, social insurance payments, and payslip generation. This reduces errors and ensures compliance.

Choose a provider with experience working with foreign employers and expatriate workers. Check reviews, request references, and confirm that the provider is licensed to operate in China.

Consider outsourcing when:

• You face complex payroll rules.
• You hire staff across several Chinese cities.
• Your HR department lacks experience with local requirements.

Using a reliable payroll service makes it easier to keep up with changing regulations and avoid legal problems.

FAQs: How Do Foreigners Make Salary Payments in China?

Paying foreign employees in China involves following local regulations on currency, tax, and payroll processes. To avoid penalties, you need to use approved methods and comply with Chinese labor laws.

Can foreign employees be paid in USD or other foreign currencies?

In China, employees must be paid in Chinese yuan (RMB) when working under a labor contract registered within the country. It is not allowed to pay salaries in USD or other foreign currencies directly into Chinese bank accounts for local positions.

If you want to pay in a foreign currency, you must do it outside China and only if the contract allows it.

How is income tax calculated for foreigners in China?

Foreigners working in China are subject to individual income tax (IIT) on their China-sourced income. Tax rates range from 3% to 45%, based on how much you earn each month.

The tax system also gives some deductions for social insurance and some allowances, but you must report income correctly.

Are foreign workers required to pay social insurance?

Most foreign employees in China must join the country’s social insurance program if they have a local employment contract. This includes payments for pension, medical, unemployment, work injury, and maternity insurance. Rules may differ in some cities, and some countries have agreements with China that allow exceptions.

What happens if an employer doesn’t pay taxes correctly?

If your company does not pay taxes according to the law, it could face heavy fines and other penalties. The authorities can also investigate tax fraud and suspend business operations if they find serious problems. Personal liabilities may also apply to company leaders, making compliance important.

Can foreign-owned companies use Alipay or WeChat for payroll?

Chinese companies most commonly use bank transfers to pay salaries. While Alipay and WeChat Pay are popular for other payments, these apps are not usually used for payroll, especially for foreign-owned companies. Most payroll processing is done through registered Chinese bank accounts.

What is the best payroll system for foreign companies in China?

Foreign companies often use local payroll service providers or professional employer organizations (PEOs) to help manage payroll, taxes, and social insurance. These providers help you comply with regulations and handle local paperwork. Using a reliable payroll system will help you avoid mistakes and ensure everything is paid on time.

Conclusion

Understanding how foreigners make salary payments in China is important for employers and expat employees. 

Following the tax rules, choosing the correct payment methods, and keeping proper records help make the process smooth and stress-free.

If you need help with payroll or compliance in China, contact Choi & Partners for expert advice and support.

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