In order to provide a quick response to the 2019-nCov outbreak, the China State Administration of Taxation and the Ministry of Finance have issued additional communications concerning specific policies in support of the taxpayers during the pneumonia outbreak, including the Announcement no. 8 (2020) on “Tax policies related to support for prevention and control of pneumonia epidemic of new coronavirus infection”, Announcement no. 9 (2020) on “Tax Policy on Donations in Support of Pneumonia Epidemic Prevention and Control of New Coronavirus Infections”, Announcement no. 10 (2020) on “Individual Income Tax Policy in Support of Pneumonia Epidemic Prevention and Control of New Coronary Virus Infection”, and Circular no. 4 (2020) on “ Administration of Tax Collection in support of Pneumonia Epidemic Prevention and Control of New Corona Virus Infection”.
The policies, to be implemented retroactively from January 1st, 2020, are summarized below and represent a response in the fight against the novel coronavirus, with the purpose to further increase the production and the supply of key materials for the prevention and the control of the infections:
Exemption from individual income tax for bonuses and allowances received by medical personnel and prevention workers involved in the outbreak control and prevention;
Exemption from individual income tax for the physical supplies of medicines, medical and protective equipment received from the working unit to prevent the pneumonia infections;
Enterprises producing key materials for the prevention and control of pneumonia outbreak could apply to receive the full refund of the incremental VAT compared to December 2019;
Enterprises providing transportation services for key materials for the control and prevention of the epidemic outbreak could be exempt from VAT and additional surcharges;
Enterprises providing certain essential living services and materials during the outbreak (i.e., public transportation services, living services and delivery services to residents) could be exempted from VAT and additional surcharges;
Enterprises purchasing equipment to expand the production of key materials for the prevention and control of epidemic outbreak are allowed to one-time deduction of such equipment;
Health authorities importing materials to be used directly in the prevention and control of epidemic outbreak are exempted from customs duties;
Donations from enterprises and individuals to public welfare organizations or state organs as the People’s Government bodies at or above the county level are deductible in the computation of the taxable income;
Donations from enterprises and individuals to hospitals responsible for the prevention and the control of the epidemic infections care deductible in the computation of the taxable income;
Free donations from working units, individuals and commercial households through public welfare social organizations and state organs, in order to respond to the epidemic pneumonia outbreak are exempted from VAT, consumption tax, and additional surcharges;
Donations related to imported key materials, disinfection articles, protective articles, ambulances, and similar goods may be exempt from custom duties, value added tax and consumption tax from January 1st, 2020 to March 31st, 2020;
Enterprises operating in certain industries greatly affected by the 2019-nCov (i.e, transportation, catering, accommodation, tourism) can carry-forward the loss incurred in 2020 up to eight years (instead of five years).