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Temporary reduction and exemption of social contributions (COVID-19)

The Chinese Premier Li Keqiang announced on February 18th, during an executive meeting of the State Council, several additional measures to support the companies and stabilize the employment by lowering or exempting employers from the payment of some social insurance contributions and deferring the payment of housing fund contributions.

The new measures will be implemented nationwide and would exempt SMEs from the payment of contributions related to the pension insurance, unemployment insurance and work-related injury insurance for the period from February to June 2020, and halve the contributions fee for large companies for the period from February to April 2020.

In Hubei, all companies will be exempted from the payment of social insurance contributions related to pension, unemployment, and work-related injury insurance in the period from February to June 2020.

Also, employers could apply to defer the payment of the housing fund contributions before the end of June without incurring late payment penalties.

Local authorities will issue relevant regulations in the next days to implement such additional supporting measures.

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:

  • Number of employees lower than 1,000 persons; and

  • Annual turnover lower than RMB 400 million.

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