The impact of social security unified taxation in China next year

Many people in the near group are discussing the implementation of social security reforms in China next year, which will increase the number of enterprises and increase operating costs. Maybe many netizens don’t understand why, I try to explain it briefly.

Let me first talk about the focus of this social security reform is that the social security premiums will be levied by taxation in the future, that is, the chances of underpayment or missed payment in the past will never return.

Missed payment: In the third-tier cities, a small company with 10 people only bought one employee with the minimum standard of social security. However, after the tax bureau was fully responsible for the collection, this situation is no longer there, and the social security of the other nine employees has to be paid.

Less payment: In the first-tier cities, the social security base has upper and lower limits, and each place is different. For example, the lower limit of Shanghai is $4279.

Assume that Mr Wong monthly salary is $10,000, but the unit may pay him only $6,000 for social security, or directly according to the lower limit of social security contributions. For example, the lower limit of Shanghai in 2018 is $4279 . Previously, according to $4279, individuals need to pay 8% of pension, 2% of medical care and 0.5% of unemployment, totaling 10.5%, and paying social security is $449;

Now with $10,000 as the base, the payment of social security is $1050, and the overpayment of $601, that is, personal income is less.

Still taking the Shanghai Laowang with a monthly salary of 10,000 as an example, before the base of $4279, the enterprise needs to bear 20% of pension, 9.5% of medical care, 0.5% of unemployment, 1% of birth and 1% of work injury (the proportion of work injury insurance payment due to industry) 0.2%~1.9%), a total of 32%, unit payment of $1369.28;

Now with $10,000 as the base, the unit pays $3,200, and the unit pays more than $1831. In other words, if the enterprise originally had to pay the 10,000-month salary to Lao Wang, the actual cost would be $11,369, but now it is $13,200, an extra $1831.

After reading this example, everyone should understand that after the social security premiums are collected under the taxation in the next year, the situation of the company’s previous payment and underpayment of social security fees will be difficult to sustain. Therefore, after the enterprise pays the social security payment, the operating cost will be greatly improved, and the employees will be personally The income will also decrease accordingly.

According to Guotai Junan’s report: “The social impact of the reform of the social security management system?”: “We measure the final impact of the national total: after the reform of the collection and management system, enterprises and individuals will pay a total of nearly 2 trillion yuan. If enterprises and individuals jointly bear the current rate, it will affect the total profits of enterprises by 13.4%, short-term increase in enterprises. Operational pressure. If it is completely borne by the individual, it will further reduce the current consumption of the residents, and the cumulative impact on GDP will be 1.5 percentage points.

The results of our calculation: According to the average social security total rate of 31 provinces and municipalities of 39.07%, we calculated that the amount of social security payable is 8.6947 trillion yuan, and the difference between the income of social security fund in 2017 is 1.9794 trillion yuan, which is the total amount of payment:

Impact on corporate earnings: In the case that the total amount of compensation is close to 2 trillion, if the enterprise and the individual are normally shared according to the current rate, the enterprise may eventually have to pay 1.5 trillion yuan, compared with the enterprise’s 11.2 trillion in 2017, the profit The total amount decreased by approximately 13.4%.
Impact on consumption: If the enterprise passes the individual method and let the employees bear all of them, assuming a marginal consumption propensity of 0.6, we estimate that it will eventually affect the total consumption of 1.2 trillion, which will impact the GDP by 1.5%.

Therefore, from the perspective of the total amount, whether the enterprise and the individual share the payment, or completely transfer the individual commitment, it will have a greater negative impact on the economy. The former will significantly affect the profitability of the enterprise, and the SME may face significant operational pressure. Ascension, the latter has further squeezed the current downside consumption. ”

Next year, domestic enterprises have not paid social security fees in full according to the regulations in the past will be able to substantially increase their operating costs since they must comply with the latest regulations. Perhaps many SMEs will fail to close down.

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The impact of unified social security taxation in China next year (continued)