25 February 2020
Battle against the coronavirus epidemic: Chinese government takes action by implementing supportive financial and tax measures for businesses

macau-battle-against-corona-Marxman-Chinadesk

In China’s battle against the coronavirus epidemic, the nation is striving to contain the spread of the virus. Many provincial and municipal governments across China have issued first-level emergency responses to enable emergency measures in combating the epidemic. For enterprises across China, such measures are directly impacting on businesses, resulting in economic consequences.

To address the economic impact of the coronavirus, the Communist Party Central Committee and the State Council, under the leadership of President Xi Jinping, have called on all Party committees and governments at all levels to minimize the impact of the epidemic in order to maintain steady economic performance as well as social harmony and stability.

In response, many provincial and municipal governments have enacted measures to support businesses and reduce the burdens caused by the coronavirus epidemic. This includes, amongst other things, the following:

Increased financial and taxation support for key enterprises in epidemic prevention

For key enterprises involved directly in the epidemic prevention, any increased production capacity and purchases in equipment can enjoy preferential tax treatment related to value-added tax, income tax and registration fees. Equally, financial credit support and channels shall be strengthened for key enterprises with discounted loan rates.

Reduced and exempted corporate rental fees

Small and medium enterprises renting and engaged in production and operation activities within the state-owned real estate sector will be exempted from February and March rental fees. State-owned real estate includes various development zones and industrial parks, entrepreneurial bases and technology incubators. Large-scale commercial buildings, shopping centers and other private commercial real estate are encouraged to reduce rental fees. Enterprises taking initiative to reduce or exempt housing rent or land rent, and face difficulties in payment related to real estate tax and urban land use tax may apply for reduction or exemption of such taxes.

Deferred tax declaration

During the epidemic prevention and control period, affected taxpayers experiencing difficulties in reporting taxes within the provisioned time period may apply for a time extension. For those who meet the conditions for deferred tax payment, the maximum tax period is three (3) months. Any taxpayers who are unable to report and pay tax due to the impact of the epidemic may be exempted from late fees and administrative penalties.

Increased financial assistance to enterprises

Funding support is available for enterprises through multiple channels. Specifically, Pudong Development Bank, Shanghai Bank and Shanghai Rural Commercial Bank are encouraged to increase credit allocations in an effort to fight the epidemic by supporting enterprises affected by the epidemic, including small, medium and micro-enterprises.

Support for enterprises to stabilize employment

In order for employers to retain employees, 50% of unemployment insurance premiums paid in the previous year shall be returned to employers and their employees under the condition that the employers do not reduce the number of their employees and meet related requirements. Equally, the adjustment for society security contributions base will be delayed by three months and the starting and ending dates of the social insurance payment for 2020 shall be adjusted from 1 July 2020 to 30 June 2021.

Subsidized training fees

Regarding vocational training for employees organized by enterprises during the suspension period, 95% of such training cost shall be subsidized by the district of the enterprise.

Exemption or reduction of social insurance premiums

From February 2020 till June 2020, medium, small and micro enterprises nationwide — except for those in Hubei province — shall be exempted from paying pension, unemployment and work injury insurance. For large enterprises, pension, unemployment and work injury insurance payment shall be reduced by 50%.

Housing provident funds

Before the end of June 2020, enterprises may apply to defer their housing provident fund payment. Equally, in the interim period, any employee affected by the epidemic and cannot make payments on provident fund housing loans shall not be liable for overdue fees.

Enterprises outside of Hubei province

Small, medium and micro enterprises outside of Hubei province shall be exempted from basic pension insurance, unemployment insurance and work injury insurance (hereinafter referred as “three social insurances”). The policy is effective from 2 February 2020 and shall not exceed five (5) months. For large enterprises (excluding public institutions) outside of Hubei province, the three social insurances shall be reduced; the effective period starts from 2 February 2020 and shall not exceed three (3) months.

Enterprises within Hubei province

Enterprises (excluding public institutions) within Hubei province shall be exempted from the three social insurances. The effective period starts from 2 February 2020 and shall not exceed five (5) months.

Deferred social insurance premium payments

Enterprises severely affected by the coronavirus epidemic in matters of production or operation may apply to defer social insurance premium payments. The deferred payments shall not exceed six (6) months and there will be no late payment fees during the deferred period.

As long as the battle against the coronavirus is going on, we expect further fiscal, tax, financial and social security policies for providing relief for small and medium-sized enterprises. We will keep you informed regarding these developments. If you have any questions regarding the coronavirus epidemic, please do not hesitate to contact Marxman Chinadesk.

Marxman is a member of the China Collaborative Group (CCG). The CCG is an international network which enables to facilitate trade with and investment into China, as well as investments from China to abroad.

Please call Bas Besseling (+31 652573320), Michiel Appelhof (+31 652573306) or Susanna Tang (+31 652573000) in case you have further questions or need assistance.