Multinational investment banks 'face new payroll tax in China'

12 July 2010

Multinational investment banks operating in China are being encouraged to establish union chapters.

Firms such as Goldman Sachs, JPMorgan, UBS and Morgan Stanley have met with China's state-controlled union on the issue, reports the Financial Times.

They will be required to pay a two per cent payroll tax to fund labour activities under the terms of the deal.

An insider said there is little chance of the banks escaping the levy from the All China Federation of Trade Unions.

"This is the government telling them what to do. It's not a question of are they going to do it," the source said.

"It's what form is it going to take and how much is it going to cost."

Earlier this year, an article in the Financial Times stated that a growing number of Western banks are looking to increase the number of staff they have in Asia.

It named companies such as Barclays, Deutsche Bank, Standard Chartered and Citigroup as among those hiring more workers in the region.

Posted by Asim Shah

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