Specials
China’s tax measures to combat COVID-19 and spur economic growth
Updated: Mar 26, 2020
www.chinaservicesinfo.com
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China has unveiled a series of tax reform measures designed to meet the unprecedented challenge of the novel coronavirus outbreak. Let's take a look!
I. Support COVID-19 prevention, control and treatment
Preferential subject |
Preferential object |
Preferential method |
Medical staff and workers participating in disease prevention and treatment |
Temporary work subsidies and bonuses in accordance with specific standards stipulated by the governments at all levels |
Exempted from individual income tax |
Other personnel participating in virus prevention and control |
Temporary work subsidies and bonuses stipulated by the people’s government at or above the provincial level |
Exempted from individual income tax |
Individual |
Medical protective equipment given out by employers, excluding cash |
Exempted from individual income tax |
Duration: Starting Jan 1, 2020, the deadline depends on developments in the pandemic situation.
II. Ensure material supply
Preferential subject |
Preferential object |
Preferential method |
Key pandemic prevention and control material production enterprises |
Tax credits for the incremental value-added tax (VAT) |
Refund in full |
Purchase equipment to expand production capacity |
One-off deduction before corporate income tax |
|
Taxpayers who provide transportation of essential materials for pandemic prevention and control |
Income from transport of essential materials for pandemic prevention and control |
Exempted from VAT |
Taxpayers who provide public transport services |
Income from provision of public transport services |
Exempted from VAT |
Taxpayers who provide life services |
Income from provision of life services |
Exempted from VAT |
Taxpayers who provide express deliveries of daily necessities |
Income from provision of express deliveries of daily necessities |
Exempted from VAT |
Health authorities |
Imported materials for direct use in pandemic prevention and control |
Duty-free |
Duration: Starting Jan 1, 2020, the deadline depends on developments in the pandemic situation.
III. Encourage public welfare donations
Preferential subject |
Preferential object |
Preferential method |
Company Individual |
Cash and items donated to fight against the pandemic from non-profit social organizations or the people's governments at or above the county level and their departments |
Fully deducted before calculation of corporate or personal income tax |
Direct donation of pandemic-resistance items to hospitals undertaking the disease prevention and treatment tasks |
Fully deducted before calculation of corporate or personal income tax
|
|
Work unit Self-employed business |
Free donation of self-produced, commissioned or purchased goods in response to the COVID-19 outbreak |
Exempted from VAT, consumption tax, urban maintenance and construction tax, education surcharge, and local education surcharge |
Donator |
Imported goods necessary for direct pandemic control |
Exempted from import tariffs, VAT and consumption tax |
Duration: Starting Jan 1, 2020, the deadline depends on developments in the pandemic situation.
IV. Resumption of work and production
Tax reduction and exemption
Preferential subject |
Preferential object |
Preferential method |
Enterprises in difficult industries severely affected by the pandemic |
Losses in 2020 Note: difficult industries include: transportation, catering, accommodation, and tourism industries |
The longest carry-over period is extended from five years to eight years |
Duration: Starting Jan 1, 2020, the deadline depends on developments in the pandemic situation.
Preferential subject |
Preferential object |
Preferential method |
Small-scale VAT taxpayers in Hubei province |
Taxable sales income applicable to 3% tax rate
|
Exempted from VAT |
Prepaid VAT items applicable to 3% prepaid rate
|
Suspension of prepaid VAT |
|
Small-scale VAT taxpayers outside Hubei province
|
Taxable sales income applicable to 3% tax rate
|
Collect VAT at a reduced rate of 1% |
Prepaid VAT items applicable to 3% prepaid rate
|
Prepaid VAT at a reduced prepaid rate of 1%
|
Duration: From March 1, 2020 to May 31, 2020
Fee reduction and exemption
Preferential subject |
Preferential object |
Preferential method (Starting Feb 2020) |
Medium-, small- and micro- businesses |
Employers' payments to endowment, unemployment, and work injury insurance |
Exemption No more than 5 months |
Large enterprises and other work units (Excluding government agencies) |
Employers' payments to endowment, unemployment, and work injury insurance |
50% reduction No more than 3 months |
Work units in Hubei province (Excluding government agencies) |
Employers' payments to endowment, unemployment, and work injury insurance |
Exemption No more than 5 months |
Enterprises severely affected by the pandemic |
May apply for deferred social insurance premium |
Holdover period No more than 6 months |
Work units |
Employers’ payment of basic medical insurance for employees |
50% reduction No more than 5 months |
The fourth batch of policies focuses on reducing the negative impact of the COVID-19 pandemic and stabilizing foreign trade and investment:
1) All export tax rebates must be made in full and without delay except for energy intensive, polluting and resource sectors. The average processing time of tax rebates has been curtailed by 20 percent.
2) Efforts shouldbe made to shorten the negative list of foreign investment and expand the number of industries in which foreign investment is encouraged, so that foreign investors in more sectors benefit from tax and other incentives.
3) The recent tax and fee relief policies designed to help companies in difficulty should equally apply to both domestic and foreign-invested enterprises.
Note: The specific implementation of the above policies shall refer to the public announcements released by the Ministry of Finance, the State Taxation Administration and the General Administration of Customs.
Source: State Taxation Administration
