Tax Authorities Phase In Social Security Compliance, Avoid One-Size-Fits-All

In advancing social security contribution compliance and solidifying payment bases, tax authorities have made clear they will not adopt a one-size-fits-all approach or force enterprises to achieve full compliance in a single step. Zhang Hui, director of the Beijing 12366 tax and payment service center under the State Taxation Administration, said that given current economic conditions and business circumstances, since 2026 the authorities have focused this effort on "large and medium-sized enterprises with payment capacity." Even for such enterprises, the authorities adhere to a "one enterprise, one policy" principle, allowing them to progress gradually within reasonable timeframes to minimize disruption to production and operations. In addition, the campaign regulates only current-period payment bases, is not retroactive, and involves no centralized collection of overdue contributions. Individual cases from the 2024 fiscal year, such as worker complaints and reports, are handled prudently through the social security contribution dispute resolution mechanisms already established in various localities, following the principle of "lawful and compliant handling, case-by-case review."

Zhang Hui said that collecting taxes and fees lawfully and in accordance with regulations is the fundamental duty of tax authorities, while supporting enterprise development and improving the business environment is equally their responsibility. The tax authorities consistently uphold the principle that protecting business entities means protecting the economic tax base, and will firmly implement tax and fee preferential policies to actively support the healthy and standardized development of all types of business entities.

The outline of the 15th Five-Year Plan calls for enhancing the sustainability of the social insurance system. Compliant payment of social security contributions is both an objective requirement for strengthening the system's sustainability and an important safeguard for protecting workers' lawful rights and interests. Zhu Qing, a professor at the School of Finance at Renmin University of China, noted that solidifying the social security payment base is necessary for compliance and reflects the broader trend; it is also one of the important ways to replenish social security funds and close long-term funding gaps, while benefiting worker rights and long-term enterprise development. On one hand, non-compliant contributions infringe upon workers' social security rights. The Social Insurance Law clearly stipulates that paying social security contributions for workers in full and on time is a statutory obligation of employers. In practice, however, some employers evade social security costs by covering only some employees, paying at the minimum base, or signing dual contracts, which undermines workers' social security rights, lowers their post-retirement protection levels, and leaves hidden risks for the enterprises' long-term development. On the other hand, as population aging and declining birth rates intensify, the sustainability of the social insurance system, particularly the pension system, faces growing challenges.

China's basic pension system for workers operates on a mechanism where longer contribution periods and higher contributions yield greater benefits; the higher an individual's contribution wage base and the longer the contribution period, the higher the pension level after retirement. Zhu Qing said that an inaccurate payment base not only affects the sustainability of social security funds but will also drag down future pension levels, harming participants' interests. In recent recent years, with the arrival of a peak wave of worker retirements, social security contribution disputes have become increasingly frequent, particularly the growing phenomenon of workers reporting employers for incomplete contribution payments immediately upon resignation. Advancing compliant social security payments benefits the sustainable growth of social security funds, safeguards people's pension and livelihood funds, and helps resolve contribution disputes at the source.

A human resources executive at BYD Group said that there was previously a perception that underreporting social security payment bases could reduce current labor costs, but in the long run, such practices tend to create hidden risks. Recognizing this, BYD Group has in recent years proactively raised its social security compliance standards and improved the rate at which its payment base is fully reported. The executive said that paying social security contributions in full serves as a "passport" for creditworthy business operations, allowing management to focus on core business and helping to resolve labor disputes. Social security is a source of reassurance for workers' pension, medical, and maternity benefits; with a solid payment base, workers' rights in areas such as pension provision are enhanced. Over the past two years, BYD's voluntary turnover rate in core positions has fallen significantly, and the onboarding rate of high-quality talent during recruitment has improved.

The finance executive at Zhuzhou Huarui Precision Tools Co. , Ltd. in Hunan said that compliant social security declaration and payment benefits both enterprises and workers. For enterprises, standardized base declaration avoids the contribution-related risks arising from underreporting, omission, or misreporting, reduces labor disputes, and lays a solid foundation for long-term stable development. For workers, full and compliant social security contributions genuinely safeguard their lawful rights in pension, medical, work injury, and unemployment insurance, giving them a stronger sense of belonging and security. Paying social security in accordance with the law protects workers' immediate interests while also ensuring the company's stable development.