Hawksford-COVID-19 Update: Government Discounts and Tax Breaks for Companies in China

Dear Members and Friends,

The China-Italy Chamber of Commerce is glad to share an article that Hawksford has published on "COVID-19 Update: Government Discounts and Tax Breaks for Companies in China."

To support companies’ cash flow against the COVID-19 outbreak, national and regional government departments are offering a range of discounts and tax breaks. This article provides an overview of how companies can benefit from the financial support of the Chinese Government.

Please note that rules and policies vary from region to region and are changing at a fast-moving pace. Whilst we endeavor to provide accurate and latest information, companies should liaise with local partners, government departments or Hawksford regional offices to get the most up-to-date information.

Below is an overview of some of the financial assistance available.

Postponement of tax deadline

Most cities and regions have postponed the deadline for filing tax returns. These vary from city to city, with some cities, such as Xian, offering up to 6 months extra time to comply with tax obligations.

Refund of unemployment insurance funds

China’s Labour Department will refund up to half of the total funds paid in during the whole of 2019 to the unemployment insurance funds, as long as no staff are terminated.

Bond refund

For certain industries such as travel companies, the withheld insurance bond that is held by the government can offer refunds of 80 percent of the bond. Companies have seen these returned within 48 hours of application in Beijing.

Additional social insurance funds reduction

SMEs do not need to pay enterprise pensions, unemployment, or work injury insurance from February to June 2020. Large enterprises will only have to pay half.

There are also further discounts on medical insurance funds for the year available.

In most regions, companies will benefit from a grace period of three months from the end of the epidemic emergency to clear payment of any overdue social insurance. However, local policies apply.

No penalties for delayed social registrations and visa renewals

If a new employee delays his registration or applies late for his work and resident permits, he will not receive penalty fees.

Subsidies for online training

Local subsidies will cover 95 percent of total expenses for employees wishing to carry out online training and betterment.

Rent and utility discounts

Businesses that rent from State Owned premises or assets in some districts are granted discounts and rent holidays. If businesses rent for one month, they will be exempted, and they will pay half if they rent for two months.

Discounts are also available from state-run utility companies. Landlords are encouraged to reduce the rent for SMEs that are renting business premises. Landlords and SMEs should negotiate and come to an agreement about reduced rental fees.

Low interest loans

China’s central bank has lowered interest rates and instructed local banks to support local businesses.

In Shanghai, Companies involved in health and safety, or essential products and services can receive loans at a rate of no more than 1.6 percent.

Further discounts on loans in various regions are also available.

Direct financial assistance

For some key sectors, direct financial assistance from the government can be available.

Tax reductions

Reductions on real estate tax and urban land use tax is available in many regions.

Companies can obtain  VAT refunds and exemptions, especially those working in affected industries.

Furthermore, companies in industries such as transport, hospitality and others severely affected can deduct losses against profits for eight years, instead of the standard five.

The full article is available here.

Kind Regards,

CICC Team