Economic compensation Includes social security

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Monthly wages are pre-tax wages, including social security.

The average salary to calculate the economic compensation includes the company's deductions. Because the withholding belongs to the wages and salaries, but also includes the withholding of taxes, economic compensation refers to the salary is the pre-tax wages and salaries, because the economic compensation over a certain amount of money to pay personal income tax, if it is calculated in accordance with the after-tax salary, there is the effect of double taxation.

Wage and salary income, refers to the wages, salaries, bonuses, year-end raises, labor bonuses, allowances, subsidies and other income related to employment or employment. That is to say, the income obtained by individuals, as long as it is related to the post, employment, regardless of the unit's capital expenditure channels or in the form of cash, in-kind, securities and other forms of payment, are wages, salaries, income items of the object of taxation.

General living expenses are exempted from personal income tax; issued to the employees of the heating subsidy, cold weather fee, summer fee, in kind, such as the Mid-Autumn Festival mooncakes, Dragon Boat Festival dumplings and other non-monetary collective welfare should be based on the market price, the purchase price, or other prices converted into an equal amount of monetary amount, meals, holiday subsidies, has been realized in monetized housing subsidies, transportation subsidies, car subsidies, communications subsidies, should be included in the management of the total wages and salaries, and in the form of cash, securities. shall be included in the total wage management, and personal income tax.

Article 14 of the Regulations on the Implementation of the Individual Income Tax Law of the People's Republic of China (PRC) further explains that the welfare expenses referred to in item 4 of Article 4 of the Tax Law refer to the subsistence allowance paid to an individual out of the welfare expenses or labor union funds of an enterprise, an institution, a state organ, or a social organization, according to the relevant provisions of the state. The State Administration of Taxation (1998) No. 155 explains that the living allowance refers to the taxpayer's or his family's normal life due to some specific events or reasons that cause certain difficulties, and his employer pays him temporary living allowance from the welfare or labor union funds according to the state regulations.

For example, the hardship allowance, relief fund, medical subsidy, staff convalescence fee, work injury compensation fee, funeral fee, pension, one-child fee, and staff relocation fee, etc., which are paid to the employees from the welfare fee of the enterprise in accordance with the regulations, are exempted from personal income tax.