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Tax policy review: Fighting COVID-19 and spurring economic growth

Updated: Mar 26, 2020 govt.chinadaily.com.cn Print

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

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

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