This report covers new rules that affect the administrative and permit requirements for Hong Kong, Macau, and Taiwan residents working in mainland China.
The State Council of the People’s Republic of China recently issued a new statement1 regarding the cancellation of a series of administrative permits, which include the cancelation of work permit application requirements for residents of Hong Kong, Macau, and Taiwan inbound into mainland China.
Employers should find it simpler and more convenient to hire or assign in/to the People’s Republic of China (“China”) individuals resident in Hong Kong, Macau, and Taiwan. However, they should consult with their professional tax or global mobility advisers regarding the tax and social security implications of hiring residents of Hong Kong, Macau, and Taiwan, or assigning them to China.2
Recent regulatory updates in relation to work permit requirements for Hong Kong, Macau and Taiwan residents in mainland China have the following implications:
Effective 1 January 2019, Hong Kong, Macau, and Taiwan residents employed in mainland China can use their valid personal identity documents, such as the Mainland Residence Permit for residents of Hong Kong, Macau, and Taiwan, and Mainland Travel Permits for Hong Kong, Macau, and Taiwan residents for matters relating to human resources and social security. An industrial and commercial business license, labour contract, proof of salary payment, and proof of social security contribution payment could serve as evidence of employment on the mainland for residents of Hong Kong, Macau, and Taiwan.
Abolishment of the work permit requirement for Hong Kong, Macau, and Taiwan residents and the issuance of Residence Permits for Hong Kong, Macau, and Taiwan residents should have the effect of providing convenience for those residents to work, study, live, and travel in mainland China. Hong Kong, Macau, and Taiwan residents who take up employment in mainland China will enjoy the same entitlement to labour security rights and other basic rights as their mainland compatriots.
It should be noted that Hong Kong, Macau, and Taiwan residents moving in and settling down in mainland China need to comply with the pertinent rules and regulations; the measures in respect of the Residence Permit for Hong Kong, Macau, and Taiwan residents shall not apply. Those who wish to apply for a residence permit for Hong Kong, Macau, and Taiwan residents should ascertain their eligibility before lodging an application.
In the meantime, in light of the recent passage of amendments to China’s individual income tax law2, employers should consult with their global mobility tax advisers to understand the tax implications and associated costs of hiring residents of Hong Kong, Macau, and Taiwan to work in mainland China, and make sure their policies and practices will foster proper compliance. The KPMG International member firm can assist with this.
This article is excerpted, with permission, from “Changes to Work/Residence Permit Requirements for Taiwan, Hong Kong, Macau Residents in Mainland China,” published in China Tax Alert (Issue 19, September 2018), a publication of the KPMG International member firm in the People’s Republic of China.
1 On 28 July 2018, the State Council promulgated the Decision on the Cancellation of a Series of Administrative Permits (Guo Fa  No.28), formally abolishing work permit requirement for residents of Hong Kong, Macau, and Taiwan working in mainland China. On 6 August 2018, the General Office of the State Council released the Measures on Application and Issuance of Residence Permit for Hong Kong, Macau and Taiwan Residents (Guo Ban Fa  No.81), which came into effect from 1 September.
On 23 August 2018, the Ministry of Human Resources and Social Security Bureau promulgated the Decision on Revocation of Provisions on the Employment Administration of Taiwan, Hong Kong, and Macau Residents in Mainland China (Human Resource and Social Security Bureau No.37). The Notice on Matters Relating to Employment of Hong Kong, Macau and Taiwan Residents in Mainland China (Human Resource and Social Security Bureau  No. 53) was issued simultaneously, clarifying that Hong Kong, Macau, and Taiwan residents are no longer required to apply for work permits. The Ministry of Human Resources and the Social Security Bureau also issued guidance on administrative measures relating to employment of Hong Kong, Macau and Taiwan residents in mainland China following abolishment of the work permit requirement.
2 For coverage of the government’s plans to reform the individual income tax system, see GMS Flash Alert 2018-098 (17 July 2018).
* Please note the KPMG International member firm in the United States does not provide immigration or labour law services. However, KPMG Law LLP in Canada can assist clients with U.S. immigration matters.
The information contained in this newsletter was submitted by the KPMG International member firm in the People’s Republic of China.
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