Since the coronavirus outbreak occurred in the early stages of the year, the negative impact on the Chinese economy raised uncontrolled for few weeks.
The world’s second largest economy is widely estimated to suffer a decline of around a few percentage points in the first quarter of 2020 as the virus forced the vast majority of Chinese business activities to a standstill.
All the enterprises, from small-medium to large ones, were affected by the prevention measures implemented to fight the spreading of the virus, as the normal resumption of work and reopening of fabrics and transportation is still an ongoing process.
Many of those that have been granted permission to resume operations face critical shortages of staff, with huge parts of China still under lockdown and some local workers afraid to leave their homes.
The central and local governments had to react in order to contain the virus and the economic recession and help businesses during such hard times.
The central Government released, especially in the last month, several statements and guidelines to push local governments on implementing extraordinary measures to gain more control over their crippled economy.
Regarding the Shanghai Municipality, the local Government released several measures setting also trends nationally.
The Municipal People’s Social Bureau, the Municipal Health Insurance Bureau and the Municipal Finance Bureau cooperated to introduce relevant policies to stimulate the economy and reduced the burden of Shanghai’s companies.
Here a brief recap of some of the measures released by the Shanghai Municipal Government until now:
1) Postponement of January’s tax declaration:
For taxpayers who file monthly reports, except for Hubei Province, the deadline for tax reporting is further extended to February 28. Previously, the date had already been delayed from February 17, to February 24. Moreover, taxpayers who are still unable to process tax returns or deferred declarations on February 28 may apply for further postponement.
2) Pay back of the 50% of unemployment insurance:
In order to effectively reduce the impact of the outbreak on the production and operation of enterprises, in 2020, the municipal of Shanghai will pay back the 50% of the total amount of unemployment insurance premiums paid in the previous year to companies that do not reduce the number of staff, or reduce less, or meet the conditions provided by the authority.
3) Delay of the adjustment of the social security contribution base:
This year the start and end date of the new social insurance contribution base is adjusted to July 1(not March) and will be effective from July 1, 2020 (instead of April).
This will reduce the burden of social security contributions of around 10.1 billion yuan.
4) Extended period for social insurance contributions registration:
Due to the impact of the outbreak, personnel that failed to handle the registration for social insurance payment and others on time, are allowed to make up after the outbreak.
5) Implementation of the training fee subsidy policy:
For all types of enterprises in the city affected by the outbreak, that organize online job training during the period of closing for employees (including dispatched employees working in the enterprise), shall enjoy 95% subsidy according to the actual training costs.
6) Reduction or exemption of the lease fee
Local administrations reduced or exempted the leas fee for state assets for at least a month (depending on the district). Moreover, was suggested to private owners to reduce the lease fee of non-residential assets.
Nationally, the Ministry of Finance and Administration of Taxation also announced the following measures:
1) The relevant equipment newly purchased by manufacturing enterprises producing key protection materials for the epidemic prevention and control can be fully deducted in the current period and may apply to the competent tax authorities on a monthly basis for a full refund of the incremental value-added tax credits.
2) Taxpayer shipping prevention materials are exempted from value-added tax.
3) The longest carry-over period of losses incurred by enterprises in difficult industries affected by the epidemic in 2020 is extended from 5 to 8 years. Enterprises in difficult industries includes transportation, catering, accommodation, and tourism.
4) Income of enterprises providing public transportation services and living services to taxpayers, as well as the delivery of express delivery services for essential living materials to residents, shall be exempted from value-added tax.
Moreover, the 25th of February, during further meetings, new measures were introduced to support small-medium enterprises such as:
1) Encourage the Employment of newly graduates and migrant workers by increasing subsidies and employment benefits;
2) Defer Loan Interest Payments and increasing lending at concessional rates for micro-, small- and medium-sized enterprises to help them overcome temporary difficulties. For eligible micro-, small- and medium-sized firms, with temporary liquidity difficulty, financial institutions will be encouraged to provisionally defer their loan principal repayments. Their interest payments should be deferred to June 30, with exemption on penalty interest payments;
3) Increase the credit support to micro-, small- and medium-sized businesses by re-lending and re-discount. The Government has encouraged national commercial banks to increase their lending to small and micro enterprises and strive to make the interest rate of small and micro loans significantly lower than that of the previous year. The re-lending interest rate targeting rural areas, agriculture, farmers and smaller businesses will fall by 0,25% reaching 2,5% percent. Banks will increase of 350 billion yuan the special credit quota for loan to be issued to micro-, small- and medium-sized companies at preferential rates;
4) VAT Exemption for Small-Scale Taxpayer and Individual Business from March 1 to the end of May in Hubei province, while other Provinces are expected to see a reduction from 3% to 1%;
5) 5% Reduction on Commercial Electricity Bills of Industrial and Commercial Enterprises (excluding high energy consuming companies);
6) Encourage local governments to reduce property rents and urban land use taxes to Individual business.
Above policies shall apply to all types of business and shall be further implemented locally by different Provinces.
[ news] 29 may 2023
[ news] 29 may 2023
[ news] 29 may 2023