Most of the companies operating in the territory of the People’s Republic of China are facing significant difficulties in resuming their activities and business operations after the pneumonia outbreak occurring in these days.
After a meeting held on January 30th, 2020, the State Administration of Taxation has extended the tax reporting deadline from February 17th to February 24th, 2020. In order to provide relief, several local authorities have issued specific measures in response to the pneumonia outbreak, including the reduction of the burden on enterprises, the deferral of some tax payments and the increase of the financial support for enterprises greatly affected by the current circumstances.
The local measures come along with national ones, such the injection of 1.2 trillion RMB announced by the People’s Bank of China on February 2nd, in order to maintain the liquidity in the bank system during the period of prevention and control of the pneumonia outbreak and the decrease of the financing and loans costs as provided in the circular issued by the Ministry of Finance on February 3rd.
The Human Resource and Social Security Bureau of Shanghai and the local district governments of Shanghai Municipality have announced several measures to be implemented, in order to grant a certain relief to local enterprises and to ease their social security burden.
Stabilizing the workforce
Enterprises that do not layoff nor reduce the workforce could obtain 50% of the actual amount of unemployment insurance contributions paid in the previous year. In addition, the yearly adjustment of the contribution basis will be postponed by three months to July 1st. The enterprises that are unable to pay social insurance contributions due to the pneumonia outbreak, could apply to defer the payment. However, the supplementary payment shall be made up within three months after the end of the outbreak emergency.
Subsidies for online training
Enterprises arranging their employees to participate in online vocational training during the business suspension period could enjoy a subsidy equal to 95% of the actual training cost.
Increase of the financial support
The districts of the Municipality have issued additional measures, aiming to increase the financial support to the small and medium enterprises from the bank system, to ease the approval of lending and to reduce the related costs.
Reduction or exemption of rental fee
The local governments also reduced or exempted the rental fee for state-owned lease assets for at least one month (depending on the district) and encourage the private landlords to reduce or exempt the rental fee for their tenants.
Strengthen of services provided to the enterprises
Local authorities also commit to strengthen the government services in support to the local enterprises.
Reduction of real estate tax and urban land use tax and tax deadline
SMEs that are suffering losses due to the outbreak could apply for a reduction or exemption of the real estate tax and the urban land use tax. Moreover, besides the extension of the tax deadline to February 24th (from the previous February 17th), SMEs greatly affected by the outbreak and with difficulties in paying taxes on time could apply for a deferred payment in accordance with the law for a maximum of three months.
Specific measures and implementation may vary according to the district where the enterprise is established.
Suzhou (Jiangsu Province)
On February 3rd, 2020, the Suzhou Municipal Government issued its opinions about the policies for supporting SMEs (Small and Medium Enterprises) in response to the pneumonia outbreak occurring in these days.
The measures include the increase of the financial support from institutions and a reduction of the burden on enterprises concerning social contributions and expenses.
In the specific, all the small and medium sized enterprises that have encountered difficulties in the production and business operation due to the pneumonia outbreak, could benefit of the following measures:
Increase of the financial support
Bank institutions shall increase the support to the SME and reduce the financing costs; in particular the latter shall not withdraw loans to those enterprises greatly affected by the outbreak;
Stabilizing the workforce
SMEs that do not layoff or reduce the workforce could obtain 50% of the actual amount of unemployment insurance contributions paid in the previous year. For those particularly hit by the outbreak, the return standard may be determined according to the local monthly per capita unemployment insurance contribution of six months and the number of employees participating in the insurance pillar; in addition, SMEs that are facing difficulties in the production and business operation and that are unable to pay social insurance contributions, can apply to defer the payment of pension, unemployment and work-injury insurance contribution for a maximum of six months.
Reduction of the rental fee
SMEs that rented or leased state owned assets could benefit of the exemption of one month rental fee and pay the half in the next two months. For other rental agreements, the parties shall go through negotiation, and the landlords are encouraged to reduce or exempt the rental fee for the tenants.
Reduction of real estate tax and urban land use tax
SMEs that are suffering losses due to the outbreak could apply for a reduction or exemption of the real estate tax and the urban land use tax.
Tax deadlines and payments
The State Administration of Taxation has extended the tax deadline reporting to February 24th, 2020. In addition, the SMEs that have particular difficulties in paying the taxes on time could apply for a deferred payment in accordance with the law for a maximum of three months.
Taicang (Jiangsu Province)
On February 3rd, 2020, Taicang City People’s Government has issued an announcement about the policies to support SMEs overcoming difficulties during the period of prevention and control of the pneumonia outbreak. According to the announcement, Taicang City will implement the same policies provided for Suzhou; in addition, specific policies will be implemented in Taicang Port:
free demurrage for heavy containers that enter Taicang port from January 24th to February 9th is extended by 20 days; and
a green passage is set up for container ships carrying anti-epidemic materials, relief supplies, and similar goods.
The term for the preferential policies will tentatively be three months starting from February 3rd, 2020.
According to the Notice of the National Bureau of Statistics on the “Latest Measures for the Classification of Enterprises into Micro, Small, Medium and Large-sized ones for Statistical Purposes” (2017), an enterprise is classified in one of the categories based on the industry, the number of employees and the yearly turnover. For enterprises engaged in the manufacturing business, the thresholds to be classified as SME are:
We expect the other local authorities might issue similar regulations.
This news will be updated in case of further communications and notices from the local authorities.
Last update: February 6th, 2020