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The 90 Days Rule for Chinese Business Visas Still Applies

December 31, 2014

Marco Deutsch

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By: Sophia Cao and Yang Li

United States citizens are no doubt delighted at the news that they can now obtain a 10 years business visa into China.
 
On a macro level, this bilateral agreement between the United States and China cements the strong economic ties between two of the world’s superpowers. On a micro level, travelers need to be mindful of their ongoing visa compliance in China as the 90 days rule continues to apply for business visa holders, irrespective of the visa validity period.
 
What is the 90 days rule?
 
The 90 days rule refers to a 1996 Notice issued by the General Office of the Ministry of Labor.
 
Under this notice, a foreigner is considered to be employed in China if they:
 
  • Sign an employment contract with a Chinese legal entity;
  • Receive remuneration within China; or
  • “Work” in China for more than 90 cumulative days in a calendar year (excluding foreign engineering or technical personnel and specialists working on Ministry of Commerce registered technical transfer agreements).
 
While “work” is not defined in law, the Chinese Labor Bureau takes a broad approach and interprets this provision to include both business and work activities in China.
 
This means that a business visa holder who spends more than 90 cumulative days per calendar year in China will be deemed to be employed.
 
Once a de facto employment relationship is established, the individual must obtain a work permit and residence permit or risk being deemed as illegally employed pursuant to Article 43(1) of the Exit Entry Law.
 
What are the consequences of noncompliance?
 
A business traveler who stays in China without work authorisation for more than 90 cumulative days per year will be deemed to be an “illegal worker”. A range of penalties may be imposed, including fines of between RMB 5,000 to RMB 20,000, jail terms of between 5 to 15 days, and being deported or barred from China for 1 to 5 years.
 
Employers of illegal workers also face prosecution, with fines of RMB 10,000 per illegal worker (capped at RMB 100,000) being imposed, as well as the return of any illegal gains. Additionally, the company’s legal representative may be required to attend in person to pay the fine and receive compliance education. The company itself may also be prevented or blacklisted from sponsoring any future foreign workers and named and shamed on state media.
 
Excessive time in China may also trigger taxation and other obligations for both the foreign national and the deemed employer. Clients seeking further advice on these issues should consult their tax and employment law advisors for assistance.

How can Fragomen help?
 
Fragomen offers a suite of compliance programs specifically tailored for China, including visa and permit audits, policy reviews and business visitor assessments.
 
We work with both US and China based clients to develop a pragmatic yet compliant approach for all business travelers.

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