Working

Overview

Category of employment for Hong Kong residents in the Mainland

In general, there are three types of employment arrangements for Hong Kong residents working in the Mainland:

  1. Hong Kong residents directly employed by the Mainland employers with whom the Mainland employers should enter into employment contracts;
  2. Hong Kong residents who run self employed businesses in the Mainland;
  3. Hong Kong residents assigned by foreign entities or entities incorporated in Taiwan, Macao or Hong Kong to work in the Mainland. In such cases, there is no need for the individual to establish a labour relationship with the entity receiving the individual in the Mainland, but the foreign entity which sends the individual shall issue the proof of assignment and sign secondment agreement with the local receiving entity.

For those who have established labour relations with a foreign entity or with an entity in Taiwan, Hong Kong and Macao, and have been assigned to the Mainland for less than three months, they will not be required to apply for a Taiwan, Hong Kong and Macao Expatriates Work Permit (hereinafter referred to as "Work Permit"). For those who have been assigned to the Mainland with an accumulated period exceeding three months within one year, a Work Permit is required as in the case of direct employment.

Things to note for working in the Mainland

Hong Kong residents can seek job opportunities through different channels, for instance, by personal referral, through recruitment website or employment agency.

For Hong Kong residents working in Shanghai, the following points should be taken into consideration:

Application for work permits

The employer who intends to hire or accept assigned Hong Kong residents should apply for a Work Permit for the individual(s) being hired an assigned. Hong Kong residents who fall within the "self-employed" category should apply for a work permit by themselves.

To apply for a work permit for Hong Kong residents, the employer shall submit supporting documents to the Shanghai Municipal Human Resources and Social Security Bureau, including the original physical examination certificate (medical health certificate issued or certified by the Shanghai Entry-Exit Inspection and Quarantine Bureau), Home Visit Permit for Hong Kong and Macao residents, labour contract, etc.

As for Hong Kong people who wish / intend to run a self employed business in the Mainland, the documents which should be filed with the Shanghai Municipal Human Resources and Social Security Bureau by themselves are as follows: Individual Proprietorship Business License, medical health certificate and Home Visit Permit for Hong Kong and Macao residents.

For more detailed information on employment permits, please refer to the website of Shanghai Municipal Human Resources and Social Security Bureau: http://www.12333sh.gov.cn/200912333/2009english/index.shtml

Penalty for failure to comply with work permits requirements

According to the Employment Regulations, if the employer fails to apply for work permits for its Hong Kong employees, the relevant labour and social security authorities shall order it to remedy the situation within a specified time, and a penalty in the amount of RMB 1,000 may be imposed.

In addition, the employer shall cancel work permits after termination, dissolution or expiration of the employment with Hong Kong residents. If the employer fails to do so, the relevant labour and social security authorities shall order it to remedy the situation, and a penalty in the amount of RMB 1,000 may be imposed.

Social Securities and Individual Income Tax

According to the Employment Regulations, Mainland employers should sign labour contracts with their Hong Kong, Macao and Taiwan employees and pay social securities in accordance with the Interim Regulations on the Collection and Payment of Social Security Premiums. However, detailed implementation rules may vary from one region to another.

Enrollment in Social security may fall into three categories as follows:

  1. Hong Kong residents, who are employed in the Mainland and have signed a labour contract with an employer, should enroll in the social security of the region where the employer is located;
  2. Hong Kong residents, who run a self employed business in the Mainland, should pay social security for their employees, and;
  3. Hong Kong residents who have established employment relationship with foreign employers or employers in Hong Kong, Macao and Taiwan and are assigned to the Mainland may not need to enroll in social security if they have not entered into any direct employment contract with employers in the Mainland.

Hong Kong residents / employers should pay close attention to any updates of the relevant regulations and policies to be kept abreast of and comply with the relevant requirement.

For the first category of Hong Kong residents, as Shanghai has not issued any detailed regulations, employers have the discretion to decide whether they would enroll their Hong Kong employees in the social security scheme. For more detailed information related to social security, please refer to Shanghai Social Security Online Services website (Chinese Version Only): http://www.12333sh.gov.cn/wsbs/wsbg/

Individual Income Tax on Income of Wages and Salaries

Mainland should be subject to the individual income tax in accordance with the PRC Individual Income Tax Law (Order of the President of the People's Republic of China [2011] No. 48) and relevant regulations. Hong Kong residents, who have a domicile in the Mainland or do not have a domicile but have lived in the Mainland for over one year, shall pay China individual income tax on the income derived from inside and outside of the Mainland in accordance with the prevailing tax regulations.

China Individual Income Tax treatment and calculation methods for Hong Kong residents who sign labour contracts in Hong Kong and Mainland, respectively, and provide services in Hong Kong and Mainland.

According to the Arrangement between the Government of the People's Republic of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (hereinafter referred to as "PRC-Hong Kong Tax Arrangement"), if Hong Kong residents have not been hired by a Mainland company, and the total period of their stay in the Mainland do not exceed 183 days within any 12-month period, and if their salaries are not borne or paid by any company or permanent establishment in the Mainland, their income from wages and salaries should not be subject to individual income tax of the Mainland.

Income from wages and salaries by Hong Kong residents shall firstly be divided as domestic income and foreign income:

Moreover, the China individual income tax liability shall be determined based on the time of residence in the Mainland (see table below):

Time of residence in the Mainland Mainland Payment Foreign Payment Formula Applied (Tax Payable)
Domestic Payment Foreign Payment Domestic Payment Foreign Payment

1 day -90/183 days (183 days in accordance with the PRC-Hong Kong Tax Arrangement)

Taxable Tax-free; Senior executives up to the director provisions of applicable PRC-Hong Kong Tax Arrangement need to be taxed Tax-free Tax-free (Taxable income from monthly salary paid inside and outside China * applicable tax rate - quick deduction) * (monthly salary paid inside China / total monthly salary paid inside and outside China) *(number of days inside China in the month / number of days in the month)

(Note: For senior executives up to the director provisions of applicable PRC-Hong Kong Tax Arrangement, see Note 1)

91/184 days (184 days in accordance with the PRC-Hong Kong Tax Arrangement) - less than one year

Taxable Tax-free; Senior executives up to the director provisions of applicable PRC-Hong Kong Tax Arrangement need to be taxed Taxable Tax-free (Taxable income from monthly salary paid inside and outside China * applicable tax rate - quick deduction) * (number of days inside China in the month / number of days in the month) (Note: For senior executives up to the director provisions of applicable PRC-Hong Kong Tax Arrangement, see Note 2)

1-year,less than 5-year

Taxable Taxable Taxable Tax-free (Taxable income from monthly salary paid inside and outside China * applicable tax rate - quick deduction) * [1 - (monthly salary paid outside China / total monthly salary paid inside and outside China) * (number of days outside China in the month / number of days in the month)]

Over 5-year

Taxable Taxable Taxable Taxable Taxable income from monthly salary paid inside and outside China * applicable tax rate - quick deduction

Note 1: (Taxable income from monthly salary paid inside and outside the Mainland * applicable tax rate - quick deduction) * (number of days in the Mainland in the month / number of days in the month)
Note 2: (Taxable income from monthly salary paid inside and outside the Mainland * applicable tax rate - quick deduction) * [1 - (monthly salary paid outside China / total monthly salary paid inside and outside the Mainland) * (number of days outside the Mainland in the month / number of days in the month)]

Hong Kong Residents who are Employed Directly by the Mainland Employer and Work in the Mainland Only

For Hong Kong residents who are directly employed by and whose wages / salaries are borne by the Mainland employers, such wages and salaries are subject to Individual Income Tax. The income tax will be withheld by the employers.

Applicable individual income tax rates range from 3% to 45%, and can generally be split into seven categories on a progressive basis. Hong Kong residents' salaries received in the Mainland will be subject to individual income tax reporting and payment on a monthly basis, after taking into account a monthly standard deduction in the amount of RMB 4,800. Some non-cash benefits or reimbursement provided to individuals based on actual costs may be exempt from individual income tax if they qualify as "non-taxable" items or benefits. These tax-free items include housing allowance, meal allowance, laundry expenses, and relocation expenses to and from the Mainland, home leave allowance, language training expenses, and children's education subsidies.

For more information on personal income tax please refer to the website of the Shanghai Municipal Office:
http://www.tax.sh.gov.cn/pub/ywb/; or call the Shanghai Municipal Office's service hotline at 021-54679568

For more information about Arrangement between the Government of the People's Republic of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, please refer to the website of the State Administration of Taxation: http://www.chinatax.gov.cn/n2925/index.html

According to the Circular of the State Administration of Taxation on Issues Concerning the Implementation of Several Policies on Individual Income Tax (Guoshuifa [2009] No. 121), a Hong Kong resident who opens a factory in the Mainland and takes up the role of a director as well as performs managerial duties, his / her income / director's fees arising from such duties should also be subject to individual income tax.

Education

Children of Hong Kong residents may choose to receive pre-school, primary, secondary and tertiary education in the Mainland.

Pre-school education

Children of Hong Kong residents may choose to attend a local kindergarten or international schools (schools that cater primarily for children of expatriates or non-Chinese residents) for pre-school education.

Entrance requirements are set by individual schools and are generally published on their official websites. If Hong Kong residents would like to enroll their children in a local kindergarten, they may contact the kindergarten directly. Whether or not the children will be accepted would be subject to the discretion / decision of individual kindergarten. If Hong Kong residents opt to send their children to international schools, the application should be made to individual international school in accordance with their requirements. The schools will have sole discretion on whether or not to accept such application.

For more information on international schools approved by the Ministry of Education, or a list published by the Shanghai Municipal Commission of Education containing kindergartens located in different districts and counties, please refer to the relevant website of the Ministry of Education and the Shanghai Municipal Commission of Education:

Primary and secondary education

Children of Hong Kong residents may choose to attend a local primary or secondary school, or an international school. Parents or guardian of Hong Kong students in Shanghai should familiarize themselves with relevant education systems, admission requirements, application period, and other detailed information before enrolling their children.

A written application should be submitted to the Overseas Chinese Affairs Office of the district or county government in the region where the parents or the guardian live in. After obtaining the required government approval, Hong Kong residents may then contact the school(s) of their choices, and provide documentation as required by the school(s). Discretion rests with individual school to decide whether to admit Hong Kong students based on local regulations on the size of the classes and the circumstances of the students. Once admitted, those Hong Kong students could attend schools / classes as non-Shanghai resident students on a temporary basis. For more information on the application / admissions into primary or secondary schools in Shanghai, please refer to the website of the Overseas Chinese Affairs Office of the People's Government of Shanghai Municipality: http://qwb.sh.gov.cn/gb/shqb/english/index.html

If Hong Kong residents choose to send their children to international schools, the application shall be filed directly with the schools in accordance with their requirements. The schools will have the sole discretion on whether or not to accept the applicants. In the event where Hong Kong students are being transferred to these international schools during the school term, they must present their transcripts and participate in entrance examinations organized by the schools. After admission, the relevant schools should report their students' information to the Shanghai Municipal Commission of Education for record.

For more information on international schools approved by the Ministry of Education, or a list published by the Shanghai Municipal Commission of Education containing kindergartens located in different districts and counties, please refer to the websites of the Ministry of Education and the Shanghai Municipal Commission of Education:

Tertiary education

Entrance exam

Hong Kong residents who wish to apply for colleges in the Mainland can sit for an entrance examination organised by the colleges and universities that accept overseas Chinese, Hong Kong, Macao and Taiwan students. Some of the main admission requirements are as follows:

  1. Students must have completed the sixth grade course of a registered Hong Kong secondary school or the third grade course of a Mainland high school or above. Students who are currently taking part in the above mentioned courses must provide supporting documents certified by the relevant schools;
  2. Students must meet specific physical requirements by certain universities or courses (if applicable); and
  3. For Hong Kong students: Hong Kong Permanent Resident Identity Card and Home Visit Permit of Hong Kong and Macao Residents or Non-Permanent Resident Identity Card and Home Visit Permit of Hong Kong and Macao Residents.

As for the examination content and requirement, please refer to the Syllabus of joint entrance exam held by mainland colleges and universities to recruit overseas Chinese, Hong Kong, Macao and Taiwan students formulated by the Ministry of Education.

For more information, please refer to the websites of the Hong Kong Examinations and Assessment Authority or Mainland college enrollment information for Hong Kong, Macao and Taiwan students (Chinese Version Only):

Exempt from Admission Exam

In addition, according to the notice issued by the Ministry of Education with respect to Fine-tuning Work of Enrollment Hong Kong students without sitting for the entrance examinations in Colleges of the Mainland during the year of 2012 (Jiao Gang Ao Tai Han [2011] No. 72), from 2012 onwards, a number of Shanghai universities and institutions may recruit Hong Kong students who meet certain requirements / qualifications without the need to sit for the entrance exams. Hong Kong students who have sat for the Hong Kong Diploma of Secondary Education Examination or Hong Kong Advanced Level Examination can apply for open enrollment in Mainland universities. The admission requirements may vary and prospective students can refer to enrollment brochures of individual universities or post secondary institutions.

For more detailed information, please refer to the official websites of the Education Bureau of the Government of the Hong Kong Special Administrative Region and Shanghai Municipal Commission of Education:

Contact Information of major international schools

Students may choose to attend international schools that cater primarily for children of expatriates or non-Chinese residents. For more information, please refer to the official websites of the Shanghai Municipal Commission of Education: http://www.shmec.gov.cn/web/glxx/listInfo.php?id=38275

Mutual recognition of academic degrees in higher education

Hong Kong and the Mainland have reached an agreement on mutual recognition of higher education credentials and signed a Memorandum of understanding between the Mainland and Hong Kong on Mutual Recognition of Academic Degrees in Higher Education (hereinafter referred to as "Memorandum") on July 11, 2004.

According to the Memorandum, Hong Kong and the Mainland would determine a list of accredited colleges and universities and regularly update the list. Diplomas, including a bachelor's or higher degree certificates awarded by accredited colleges and universities of one party will be recognized by the other. A summary of the main points made in the Memorandum:

  1. Students who have received a bachelor's degree from accredited mainland colleges and universities may apply to study in higher education institutions of Hong Kong for a graduate degree or vocational training.
  2. Students who have received a graduate degree from accredited mainland colleges and universities may apply to study in higher education institution of Hong Kong for a PhD.
  3. Students who have received a bachelor's degree with good grades from accredited Mainland colleges and universities and have successfully completed high-quality papers or research work may apply to study in higher education institution of Hong Kong for a PhD.
  4. Students who have received a bachelor's degree from accredited Hong Kong colleges and universities may apply to study in institutions of higher education in the Mainland for a graduate degree or vocational training.
  5. Students who have received a graduate degree from accredited Hong Kong colleges and universities may apply to study in institutions of higher education in the Mainland for a PhD.
  6. Students who have received a bachelor's degree with good grades from accredited Hong Kong colleges and universities and successfully completed high-quality papers or research work may apply to study in institutions of higher education in the Mainland for a PhD.
  7. Both sides recognize and respect the autonomy or discretion of colleges and universities to recruit students according to their rules and procedures.

For more detailed information of the Memorandum, please refer to the website of the Ministry of Education:
http://www.moe.gov.cn/publicfiles/business/htmlfiles/moe/moe_2792/index.html