Likely yes, provided subsidiary bears the cost of award and makes the payment directly to the local employee.
Written agreement recommended.
Income Tax
Withholding and reporting required at the taxable event.
Social Insurance Contributions
Although uncertain, social insurance contributions are likely not required.
Likely not subject to Circular 7, provided the subsidiary bears the cost of the award and makes the payment directly to the local employee.
Note, however, that cash-settled equity awards paid by a non-PRC entity generally are subject to Circular 7.
Generally not, if the right to modify or terminate is stated in the plan and employees agree to such terms in writing.
Regulations require that part-time employees be given benefits based on the number of hours they work. This could be interpreted to apply to cash awards.
A valid basis is required to collect, process and transfer personal data.
The Personal Information Protection Law of the PRC (PIPL) became effective on 1 November 2021 and introduced new requirements. In February 2023, the Cyberspace Administration of China (CAC) released the final version of the Standard Contractual Clauses (SCCs) and SCC Measures for the cross-border transfer of personal data under the PIPL. As an alternative to the SCCs, organizations may instead be subject to a security assessment by the CAC or certification by designated institutions, depending on certain facts.
Accordingly, companies should review their approach to data privacy compliance in the context of equity plan administration, consider on which basis they may be able to rely to collect, process and transfer data and assess whether a security assessment or certification is required.