To cushion the economic hit caused by the COVID-19 outbreak, China’s central and local governments have been rolling out a series of supporting policies to shore up the confidence of businesses and ease some of their compliance burdens, besides ensuring steady medical supplies and daily necessities.
In this article, Dezan Shira provides a consolidated and updated list of many of these policies, which include policies guiding businesses to resume production, measures to facilitate foreign trade, provisions of tax and fee reductions and exemptions, financial support, social security benefits, energy cost reduction, and incentives for medical supply donations.
Dezan Shira is continually updating this list; therefore, it is recommended that readers check back with the Dezan Shira webpage for any updates to determine the effect on their business.
Businesses in China, including foreign-invested enterprises (FIEs), can leverage these special policies to overcome the difficulties caused by COVID-19. To see the documents below in English, choose the EN option at the top of each page.
Work Resumption
Epidemic control
8 April 2020
State Council: Circular about Making Arrangement on Epidemic Prevention and Control for Key Venues, Units and Groups (CN) (Guo Ban Fa Ming Dian [2020] No.16)
State Council: Circular about the Return Visit and Re-screening of Recovered COVID-19 Patients (CN) (Guo Ban Fa Ming Dian [2020] No.15)
State Council: Circular about the Management Standards for Asymptomatic COVID-19 Cases (CN) (Guo Ban Fa Ming Dian [2020] No.13)
7 April 2020
State Council: Guidelines about Advancing Resumption of Work and Production on the Premise of Effective Epidemic Containment (CN) (Guo Fa Ming Dian [2020] No.13)
Foreign-Invested Enterprises
9 March 2020
National Development and Reform Commission (NDRC) Circular on Further Deepening the Reform regarding Foreign Investment Projects to Respond to Epidemic Situations (CN/EN) (Fa Gai Wai Zi [2020] No.343)
The NDRC and Ministry of Commerce (MOFCOM) will revise the Catalogue of Industries Encouraging Foreign Investment. Tariffs on self-use equipment imported for foreign investment projects encouraged by the catalogue will continue to be waived within the investment quota. For projects beyond the investment quota, project companies can make applications with the provincial development and reform commission to enjoy tariff exemptions.
Small and Medium Enterprises
1 March 2020
China Banking and Insurance Regulatory Commission (CBIRC): Circular about Implementing Provisional Postponement in Principal and Interest Repayment for Loans to SMEs and Micro Enterprises (CN/EN) (Yin Bao Jian Fa [2020] No.6)
Epidemic-hit SMEs and micro firms, including small-business owners and individual household businesses, can make applications with banks to defer repayment of principal and interest expenses payable from 25 January to 30 June 2020. Overdue loan repayments in the period will not be subject to penalties.
25 February 2020
State Council: Introducing Strong Financial Measures to Help Smaller Firms Resume Production and Operation (CN/EN)
The State Council executive meeting on 25 February 2020 unveiled a string of measures to support SMEs. For eligible SMEs, financial institutions will be encouraged to provisionally defer their principal loan repayments. Their interest payments can be deferred to 30 June with penalty interest payments exempted.
In order to support individual businesses to resume production and operation, the council proposed exempting value-added tax for small-scale taxpayers in Hubei province and cut the tax from 3% to 1% for those outside Hubei from 1 March to 31 May 2020, reduce their contributions for endowment insurance, unemployment insurance, and work injury insurance, guide banks to issue low-cost loans to individual business operators, trim electricity charges by 5% for industrial and commercial companies but not from high energy-consuming industries, and encourage local governments to cut or waive land use tax as an incentive for property owners to cut rents for individual business tenants.
Tax and Fee Reductions
17 March 2020
STA: Circular about Extending the Deadline for Commissioned Withholding and Collection of Taxes (CN/EN) (Shui Zong Han [2020] No.43)
The deadline for commissioned withholding and collection of taxes will be extended from 30 March to 30 May 2020.
10 March 2020
STA: Guideline on Preferential Tax Policies for Prevention and Control of Covid-19
The guideline was originally published on 10 February 2020. The STA updated the guideline on 10 March. According to the document, epidemic-hit enterprises can extend the carryover period of losses incurred in 2020 by eight years; small taxpayers will be exempted from value-added tax for a period; employer contributions in endowment, unemployment, and work injury insurance will be exempted for a period; employer contributions in staff medical insurance will be halved for a period; local governments are encouraged to waive urban land use tax to support landlords to reduce or waive property rents.
Financial Support
15 April 2020
Ministry of Finance MOF: Circular about Furthering Increasing Interest Subsidies for Guaranteed Loans to Startups and Supporting Key Groups of People to Start New Business or Get Employed (Cai Jin [2020] No.21)
For small and micro firms, if 15% of their employees are newly hired, they can apply for guaranteed start-up loans; for companies with a workforce of more than 100, the ratio of newly hired employees can be lowered to 8%. Eligible individual borrowers can borrow up to renminbi (RMB) 200,000 of guaranteed start-up loans.
New loans granted before 31 December 2020 should cover individual business owners in the wholesale, retail, and catering sectors as well as full-time drivers who have borrowed loans to buy cars for online car-hailing services.
10 April 2020
State Administration of Foreign Exchange (SAFE): Notice on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business (CN/EN) (Hui Fa [2020] No.8)
10 April 2020
MOF: Circular about Playing the Role of Government-backed Financing Guarantee and Providing Credit Enhancement to Small and Micro Firms and Agricultural Industry (CN) (Cai Jin [2020] No.19)
Government-backed financing guarantee and re-guarantee agencies should halve guarantee fees for small and micro firms and strive to keep overall guarantee fees below 1% of the total loan amount.
Social Security
20 March 2020
State Council: Opinions about Implementing Measures to Stabilize Employment and Counter the Impact of the Coronavirus Outbreak (CN) (Guo Ban Fa [2020] No.6)
25 February 2020
STA: Circular about Implementing the Policy of Provisional Reduction and Exemption of Social Security Contributions (CN/EN) (Shui Zong Han [2020] No.33)
According to the circular, provincial tax bureaus should classify social security contributions that have been collected in February 2020 and determine the amount to be returned or deducted to enterprises.
HR and Labor Relations
Customs
10 April 2020
General Administration of Customs China (GACC): Announcement on the Commodity Inspection of Medical Materials to Be Exported (CN/EN) (GACC Announcement [2020] No.53)
Medical materials under the HS code “6307900010” and other items listed in the appendix will be subject to export commodity inspection.
Regional Policies (Regions: A-Z)
In response to the central government, the provincial and municipal governments also released a string of policies, such as proving tax and fee break, fiscal subsidies, financing incentives, social security refund or reduction, and rental relief, to support the local businesses. Be sure to review the full article for these regional policy updates.
This article was originally published on 3 March 2020 and updated on 20 April 2020 by China Briefing.
Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia’s complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll, and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India, and ASEAN, we are your reliable partner for business expansion in this region and beyond.
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