Tax policy may force foreign companies to choose local employment contracts.

The article focuses on a tax policy in China which may force multinational companies to choose either a high tax or provide local employment contracts to expatriates. The State Administration of Taxation (SAT) announces that it will audit non-resident enterprises sending management personnel to China. Part of the audit will examine whether expatriate secondment arrangements form a permanent establishment (PE), according to the law firm Baker & McKenzie. The bias concerning employees under the Employment Contract Law is discussed.