Coronavirus government discounts and tax breaks for companies in China

To support companies’ cashflow, national and regional government departments are offering a range of discounts and tax breaks, explains Fabio Stella of Hawksford

Whilst we endeavour to provide accurate and up to date information, companies should liaise with local partners, government departments or CBBC regional offices to get the current take. Rules and policies vary from region to region and change frequently. A more detailed city by city update can be found at the CBBC website, and 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 to the unemployment insurance fund during the whole of 2019, as long as no staff are terminated.

Bond refund

For certain types of company, such as travel agencies, 80% of the insurance bond held by the government can be refunded. 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 be required to pay half. There are also further discounts on medical insurance funds available for the year. 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 their registration or applies late for their work and resident permits, they will not receive penalty fines.

Subsidies for online training

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

Rent and utility discounts

In some districts, businesses that rent from state-owned premises or assets will be granted discounts and rent holidays. If businesses rent for one month, they will be fully exempted, and 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 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%. Further discounts on loans in various regions are also available.

Direct financial assistance

For some key sectors, direct financial assistance from the government is being made 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 etc can deduct losses against profits for eight years, instead of the standard five.

Hawksford helps companies with China company registration  and is experienced in meeting the regulatory compliance, tax, legal, accounting, HR services and other outsourced needs of global clients seeking to invest in Asia.