The Ministry of Human Resources and Social Security ("MOHRSS") and the Ministry of Finance ("MOF") have recently distributed the Circular on Continuing to Cut Social Insurance Contribution Rates by Phases (the "Circular").
The Circular states that, first, beginning from May 1, 2018, in provinces (autonomous regions and municipalities directly under the Central Government) where enterprises' rates of contribution to basic pension insurance for employees are currently higher than 19%, and other provinces (autonomous regions and municipalities directly under the Central Government) in which the enterprises' rates of contribution have been reduced to 19% under the Circular ( Ren She Bu Fa [2016] No. 36) , enterprises are allowed to make the contribution at the rate of 19% until April 30, 2019, provided that the cumulative balance of the insurance funds is sufficient to afford payments for more than nine months. Second, in provinces (autonomous regions and municipalities directly under the Central Government) where the aggregate rate of contribution to unemployment insurance is 1% under the Circular (Ren She Bu Fa [2017] No.14), the phased deduction of the contribution rates will be applicable for an extended period until April 30, 2019. Third, in overall planning areas where the cumulative balance of the work-related insurance funds is sufficient to guarantee payments for a certain period, the current contribution rate may be lowered by 20% when the said certain period ranges from 18 months (inclusive) to 23 months and by 50% if the period is 24 months or longer. Deduction of contribution rates will apply temporarily until April 30, 2019.