China’s Preferential Tax Policies
With the recent spread of the corona virus and halt of work and production, tax authorities in China have implemented a series of measures introduced by General Secretary Xi Jingping to contain and control the epidemic while work resumes. The CPC Central Committee and the State Council played an active role in supporting the resumption of work and production of enterprises. Some of the measures include:
- Obtain subsidies and bonuses for temporary work relating to epidemic prevention and control, to be done at the standards stipulated by the government. Individuals who support the community in this way are exempt from income tax;
- Individuals are also exempt from income tax if medical protective equipment issued by the unit to prevent COVID-19 infection and pneumonia, is obtained.
- Full refund of incremental VAT credits to key material production enterprises for epidemic prevention and control;
- Taxpayer money shall, as a priority, be used for epidemic prevention and control and any income from the transportation of materials is exempt from VAT;
- Any income derived from providing public transport services, services essential for daily life and express delivery services for residents' daily necessities is exempt from VAT;
- To encourage enterprises to produce key materials necessary for epidemic prevention and control, expand production capacity and purchase equipment; a one-time deduction of enterprise tax shall be applied;
- The import of materials directly used in the prevention and control of epidemic diseases organized by competent health authorities shall be exempt from customs duties.
- Enterprise and individual income tax shall be fully deducted from the cash and articles donated by public welfare social organizations or people's governments at or above the county level and their departments and other state organs in response to the epidemic;
- Donations of goods used for epidemic prevention and control direct to hospitals are allowed to be fully deducted from enterprise or individual income tax;
- Donation of goods aiding in the response to epidemic disease is exempt from value-added tax, consumption tax, urban maintenance and construction tax and education fee surcharges;
- The scope of donations for duty-free imported materials shall be expanded.
- The maximum carryover period of losses incurred by enterprises in difficult industries which are greatly affected by the epidemic is extended to 8 years in 2020;
- Phased VAT reduction and exemption for small-scale taxpayers;
- Periodic reduction or exemption of enterprise pension, unemployment and industrial injury insurance payment;
- Phased reduction or exemption of old-age insurance, unemployment insurance and work-related injury insurance for individual industrial and commercial workers insured by units;
- Pay for phased reduction of employees' basic medical insurance; and
- Encourage all localities to support leaser to reduce or reduce property rent for individual industrial and commercial households by means of reducing or reducing urban land use tax.
- Supporting Protective Treatment
- Supporting Supply of Materials
- Encourage public donations
- Support the resumption of work and production
Further information on guidelines to tax incentives to support epidemic prevention and control and economic and social development can be found at: http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5145868/content.html
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