Multi-pronged support for community-based elderly care, childcare, domestic services

China will take more steps to boost community-based elderly care, childcare and domestic services, including greater policy incentives in taxes and fees, it was decided at the State Council’s executive meeting chaired by Premier Li Keqiang on May 29.

The Chinese government places great emphasis on developing elderly care, childcare and domestic services. General Secretary Xi Jinping stressed in his report to the 19th Party Congress the imperative to improve people's well-being, address their concerns, strengthen areas of weakness and promote social fairness and justice in the course of pursuing development. The goal is to promote well-rounded human development and common prosperity for all. Premier Li Keqiang stated in this year's Government Work Report that significant steps must be taken to develop elderly care, especially community-based elderly care services, including support for institutions offering such services as day care and rehabilitation care. The government will also encourage private parties to run childcare and early childhood education agencies, and promote higher quality and an expansion of capacity in the domestic services sector.

"Elderly care, childcare and housekeeping services are crucial to improving people's well-being, addressing the aging of the population and boosting employment. There is huge demand in this regard. The inadequacy of childcare service, in particular, has become a bottleneck issue with the implementation of the two-child policy," Premier Li said. "Faster development of such services can serve multiple purposes, including boosting consumption, promoting a better division of labor and facilitating economic transformation."

The meeting decided on measures to boost community-based elderly care. Efforts will be made to increase the supply of community facilities for such services, and reduce costs. Elderly care facilities installed as required in new residential communities will offer free or low-cost services to local residents. The government will make up for the shortage of such facilities in old residential areas through repurchasing or renting.

Thresholds will be lowered for private parties to provide community-based elderly care services. The government encourages community institutions to develop comprehensive functions including boarding services, day care and home-visit services. The Internet Plus model will be used in offering tailored neighborhood services for senior citizens.

The government will provide greater fiscal support. Training programs for elderly care workers will be supported by subsidies and other measures.

"We must accelerate the development of community-based elderly care in light of China’s realities to boost the services sector. The government needs to provide support in terms of fiscal input, taxation, finance, venues, electricity and water supply," Premier Li said.

The meeting adopted an array of measures to promote higher quality and an expansion of capacity in the domestic service sector.

Colleges and vocational schools will be encouraged to launch majors in domestic services. Eligible training bases will receive funding support on a priority basis under the central government budget. Domestic service workers who are flexibly employed will be covered by the professional upskilling subsidies.

Community-based domestic services companies will not be restricted by real estate when renting their venues. Companies that hire people with difficulty in landing jobs or new college graduates will enjoy social insurance subsidies. Commercial banks will be encouraged to explore ways to provide small scale collateral- and guarantee-free loans to domestic services companies with good credit.

The government will work to improve the standards and credit system, and set up systems for service provider certification and third-party accreditation. All service workers will be required to undergo rigorous health checks. The government will follow an accommodating and prudential approach in regulating the sector.

"We must vigorously develop elderly care and child care,"Premier Li said. "Our labor productivity cannot improve without a sound division of labor. The government needs to step up in widening market access and exercising impartial regulation. This will boost the growth of related industries and deliver satisfying services to our people."

Premier Li also stressed the need to scale up vocational training to enhance the reputation and performance of the related industries.

The meeting identified a number of tax incentives for community-based elderly care, childcare and domestic services.

Between June 1 and the end of 2025, earnings of these services will be exempted from the value-added tax (VAT), and enjoy a 10-percent deduction in taxable income. Those providing real estate or land for any related services will be exempted from deed tax, property tax, urban land use tax and six types of fees, including registration fee for real estate.

The scope of VAT exemption for domestic services companies with contract-based employment will be expanded.