Shanghai deferred contributions
On 28 May 2022, the People’s Government of Shanghai announced the Action Plan for Accelerating Economic Recovery and Revitalization in the Municipality. The action plan consists of 50 measures and policies aimed to speed up the recovery of the local economy and provide relief and support to the affected enterprises, including the phased deferred payment of the social insurance and housing fund contributions.
The Municipal Human Resources and Social Security Bureau, jointly with the Municipal Medical Insurance Bureau, the Municipal Finance Bureau, and the Municipal Taxation Bureau, issued Notice [2022] no. 15 about the “Phased Implementation of the Deferred Payment Policy of Social Insurance Contributions for Enterprises in Hardly hit Industries”.
Notice 15 provides detailed implementing rules for enterprises, units, and employers operating in five industries: catering, retail, tourism, civil aviation and road, water, and rail transportation. Eligible entities in the above five industries can defer the payment of the employer’s part of social insurance contributions in stages from April onwards. In the specific, contributions for basic pension and basic medical insurance (including maternity insurance) payable from April to June 2022 can be postponed until the end of 2022, while the contributions for unemployment and work-related injury insurance from April 2022 to March 2023 can be deferred for up to one year.
It shall be noted that the employers are still required to withhold the employee’s part of the social insurance contributions and pay the amount according to the regulations.
The policy is also extended to individual industrial and commercial households operating in the hardly hit industries, with no late payment interests or fines.
Notice [2022] no. 5 issued by the Municipal Housing Provident Fund on the “Implementation of the Housing Provident Fund Phased Support Policy” implements the measure providing employers affected by the epidemic control and prevention measures with the possibility to defer the payment of the housing provident fund contributions. The deferred period is from April to December 2022, and employers must make the payment after this period. During the deferred period, the employees can withdraw and apply for housing provident fund loans without being affected by the deferred payment, with a monthly limit of RMB 3,000 for those withdrawing from the fund to pay rental fees.
The cash flow of eligible enterprises can significantly benefit from the deferral policies of the social insurance and housing fund contributions and postpone the actual payments to a later stage. Employers in Shanghai can also benefit from reduced contribution rates for unemployment insurance, which is paid at a 0.5% rate both for the employer and the employee’s part, and work-related injury insurance, which ranges from 0.16% to 1.52%, is reduced by 20%.