In order to provide a response to the COVID-19 outbreak, Central and local authorities and relevant departments have issued several measures, to relief enterprises and individuals greatly affected by the ongoing epidemic.
We summarize below the main measures that will be implemented during the period of control and prevention of the COVID-19 outbreak.
The deadline for the tax return in February has been postponed to February 28th nationwide, in order to grant enterprises enough and sufficient time to handle the tax issues after resuming work;
Enterprises greatly affected by the outbreak could apply for a deferral payment in accordance with the law for a maximum of three months;
Medical personnel and prevention workers involved in the outbreak control and prevention may be exempted from the individual income tax for bonuses and allowances received in respect of their activities;
The supply of medicines, medical and protective equipment provided to employees is exempted from the individual income tax
Qualified enterprises operating in the production of key materials could apply to receive a full refund of the incremental VAT from 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 COVID-19 (i.e, transportation, catering, accommodation, tourism) can carry-forward the loss incurred in 2020 up to eight years (instead of five years);
Enterprises subject to real estate tax and urban land use tax could apply for the reduction or exemption of the above taxes;
Local tax bureaus commit to strengthen the government services in support to the local enterprises;
Reduction of the VAT applicable to small-scale tax payers from 3% to 1% from March to May 2020, and exemption for small-scale taxpayers in Hubei Province;
Human resources and social contributions
SMEs may be exempted from the payment of some social insurance contributions (pension, unemployment and work-related injury contributions) for the period from February to June 2020;
Large companies can halve the payment of some social insurance contributions (pension, unemployment and work-related injury contributions) for the period from February to April 2020;
All the enterprises in Hubei Province would be exempted from the payment of some social insurance contributions (pension, unemployment and work-related injury contributions) for the period from February to June 2020);
Employers could apply to defer the payment of the housing fund contribution before the end of June, without incurring late payment penalties. The employees can stilly apply to use the housing fund as usual even if their employers have not paid the corporate part for them on time;
Enterprises that do not lay-off nor reduce the workforce during the period of prevention and control could obtain a refund of 50% of the actual amount of unemployment insurance contributions paid in the previous year.
Reduction of the contribution rate (up to 50% reduction) for medical insurance for maximum five months (to be implemented according to local regulations);
The yearly adjustment of the social contribution basis would be postponed by three months, from April 1st, 2020 to July 1st, 2020;
Subsidies and reduction of fees and costs
Enterprises renting state-owned assets (buildings, lands etc…) can be exempted from the payment of rental fee for at least one month, and halve the rental fee for the subsequent months (specific implementation rules vary according to the municipality);
Private landlords are encouraged to reduce or exempt the rental fee for their tenants;
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 (Shanghai);
Electricity fees would be reduced by 5% to support the resumption of the production, for a five-month period from February 1st, to June 30th, 2020.
Banks and financial institutions shall increase their support to the SMEs and reduce the financing costs;
The loans provided to the SMEs in difficulty shall not be withdrawn nor reduced;
Bank and financial institutions are encouraged to defer the repayments of principals and interest for SMEs in financial difficulties.
Announcement of the State Administration of Taxation and Ministry of Finance no. 8 (2020) on “Tax policies related to support for prevention and control of pneumonia epidemic of new coronavirus infection”,
Announcement of the State Administration of Taxation and Ministry of Finance no. 9 (2020) on “Tax Policy on Donations in Support of Pneumonia Epidemic Prevention and Control of New Coronavirus Infections”,
Announcement of the State Administration of Taxation and Ministry of Finance no. 10 (2020) on “Individual Income Tax Policy in Support of Pneumonia Epidemic Prevention and Control of New Coronary Virus Infection”, and
Circular of the State Administration of Taxation no. 4 (2020) on “Administration of tax collection in support of pneumonia epidemic prevention and control of new corona virus infection”
Circular of the State Medical Insurance Administration, Ministry of Finance and State Administration of Taxation no. 6 (2020) on “Guiding opinions on the periodic reduction of basic medical insurance premiums for employees”
Circular of the Ministry of Human Resource and Social Security, Ministry of Finance and State Administration of Taxation no. 11 (2020) on “Periodic Reduction and Exemption of company social insurance premiums”
Announcement of the State Administration of Taxation no. 27 (2020) on “Matters concerning further extension of the tax declaration period in February 2020”;
Announcement of Ministry of Finance, General Administration of Customs and State Administration of Taxation no. 6 (2020) on “Tax exemption policy for imported materials for preventing and controlling pneumonia epidemic of new coronavirus infection”;
Announcement of the People’s Bank of China, Ministry of Finance, China Banking Regulatory Commission, Securities Regulatory Commission and State Administration of Foreign Exchange no. 29 (2020) on “Further strengthening the financial support in the prevention and control of new coronavirus infection”