Does the fact that a company pays more people in social security mean that it pays more in taxes?

The impact is most direct on businesses.

It goes without saying that before social security was introduced into the tax system, many enterprises, especially those in the private sector, small and medium-sized real estate enterprises and service enterprises, paid their employees according to the social minimum wage, which is a violation of the law and a grey area that reduces the cost of the enterprise.

Only 24.1 percent of enterprises in China are fully compliant with the social security payment base, according to the 2017 White Paper on Social Security for Chinese Enterprises released by 51 Social Security, the largest third-party social security organization in China.

After the "social security into the tax" into the tax, this gray area is eliminated, enterprises must pay social security in accordance with the actual salary of the employees, otherwise it will immediately be reflected in the data of the tax department, and will be searched for by the tax audit department, penalties.

This means that for nearly 75.9 percent of Chinese companies - mainly in the private economy, small and medium-sized real enterprises and service industries - labor costs will instantly skyrocket.

According to Edward Wang of the Institute of Financial and Strategic Studies of the Academy of Social Sciences, if "social security is taxed", the labor costs of these enterprises will increase by at least 30% as a result! Spoon Classroom is now launching a special tax reform course to bring you authoritative interpretation and response.

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