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 endeavour 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.
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.
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.
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.
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.
If a new employee delays his registration or applies late for his work and resident permits, he will not receive penalty fees.
Local subsidies will cover 95 percent of total expenses for employees wishing to carry out online training and betterment.
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.
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.
For some key sectors, direct financial assistance from the government can be available.
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.
Hawksford helps companies set up businesses in China and across Asia. We are experienced in meeting the regulatory compliance, tax, legal, accounting, HR services and other outsourced needs of global clients seeking to invest in Asia.
This article was written by Fabio Stella, Associate Director of Sales and BD at Hawksford China and CBBC (China-Britain Business Council) staff for Focus Magazine.
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