Page 20 - THE SOUTH CHINA BUSINESS JOURNAL
P. 20
Fiscal Policies in Response to
the COVID-19 Epidemic
To alleviate the impact of the COVID-19, the Chinese manufacturers of key materials for epidemic prevention and
government has introduced a series of supporting policies control.
at both central and local level. In the following, we have
summarized some of the key relief measures. Shenzhen
Measures at Central Level • Enterprises producing epidemic prevention materials
are encouraged to expand investment in technological
Policies Related to Foreign Investment transformation. The enterprises can receive a maximum subsidy
Tariff on self-use equipment imported for foreign investment of 20 million yuan for not exceeding 50% of the investment in
projects encouraged by the Catalogue of Industries Encouraging equipment.
Foreign Investment will continue to be waived within the • The housing provident fund contribution rate is
investment quota. For projects beyond the investment quota, reduced, in which the minimum deposit rate is reduced from 5%
project companies can make applications with the provincial to 3%; the housing provident fund payment is also postponed.
development and reform commission to enjoy tariff exemptions. The period of enjoyment cannot exceed 12 months.
Postponement in Principal and Interest Repayment for Loans to Guangzhou
SMEs and Micro Enterprises • Require all banking institutions to ensure that the
SMEs and micro businesses affected by the epidemic can make credit balance and the number of households of small and micro
applications with banks to defer repayment of principal and businesses and individuals in the first half of 2020 are not lower
interest expenses payable from January 25 to June 30, 2020. than that of the same period in 2019.
Overdue loan repayments in the period will not be subject to • For catering, accommodation, tourism, trade,
penalties. Before the end of June, enterprises can also apply for transportation and other industries that are greatly affected by
deferred payment of the housing fund. the epidemic, banks are encouraged to reduce the original loan
interest rate by more than 10%.
Extension of Tax Filing Deadline • Policy-based financing guarantee companies at the
According to the latest Circular issued by China’s State municipal and district levels will cancel the counter-guarantee
Administration of Taxation, the tax declaration deadline in May requirements, and the guarantee rate of the affected enterprises
is postponed to May 22, 2020, nationwide. Taxpayers who still will be lowered by 1% point compared with the same period last
have difficulties in meeting the new deadline due to the severe year.
impact of the epidemic can apply to the relevant tax authorities • In 2020, the Bank of Guangzhou and the Rural
for further extensions. Commercial Bank of Guangzhou plan to increase loans to micro,
small and medium-sized enterprises by 57 billion yuan and cut
Supporting the “Difficult Industries” the interest rate for new loans to micro, small and medium-sized
Transportation, catering, accommodation, tourism industries enterprises across the board, by no less than 10% compared with
are categorized as “difficult industries”. For losses incurred the same period last year.
by enterprises in difficult industries seriously affected by the
epidemic in 2020, the maximum carryover period may be Dongguan
extended from five years to eight years.
• The qualified enterprises, including the "Made In
Measures at Local Level (Selected cities in Guangdong Dongguan" brand exhibition and sales center outside the
Province) province, shall be given subsidies of up to 1 million yuan.
• Provide employment subsidies to enterprises that
Overview directly recruit employees who are employed in Dongguan for
the first time, expand social insurance subsidies for small and
Local governments mainly formulate policies from the following micro enterprises to college graduates within two years after
two aspects: graduation, and provide one-time employment subsidies to
• Reducing labor cost, social insurance premium enterprises that recruit employees who register unemployment
and housing fund, e.g. SMEs are exempted from pension, for more than half a year.
unemployment and industrial injury insurance expenses borne • 30 million yuan arranged for the development of local
by enterprises from February to June 2020. mask production equipment enterprises, providing subsidies for
• Launching preferential tax policies, e.g. the VAT enterprises to produce and sell mask machine.
rate of small-scale taxpayers will be reduced from 3% to 1%; • Set up 10 million yuan of special funds, giving no
Measures for tax deduction and exemption will be provided for more than 12% of the subsidies to insurance products related to
resuming work and production of the enterprise products.
17 AMCHAM SOUTH CHINA
Following the implementation of various measures, we believe
that China's domestic market and its competitive advantages in
attracting foreign investment will remain unchanged. The central
and local governments are expected to roll out further stimulus
measures for various industries. Companies should keep a close
eye on these developments, evaluate their operations in China,
and make prompt applications if they are eligible to benefit from
these incentives and supporting measures.
the COVID-19 Epidemic
To alleviate the impact of the COVID-19, the Chinese manufacturers of key materials for epidemic prevention and
government has introduced a series of supporting policies control.
at both central and local level. In the following, we have
summarized some of the key relief measures. Shenzhen
Measures at Central Level • Enterprises producing epidemic prevention materials
are encouraged to expand investment in technological
Policies Related to Foreign Investment transformation. The enterprises can receive a maximum subsidy
Tariff on self-use equipment imported for foreign investment of 20 million yuan for not exceeding 50% of the investment in
projects encouraged by the Catalogue of Industries Encouraging equipment.
Foreign Investment will continue to be waived within the • The housing provident fund contribution rate is
investment quota. For projects beyond the investment quota, reduced, in which the minimum deposit rate is reduced from 5%
project companies can make applications with the provincial to 3%; the housing provident fund payment is also postponed.
development and reform commission to enjoy tariff exemptions. The period of enjoyment cannot exceed 12 months.
Postponement in Principal and Interest Repayment for Loans to Guangzhou
SMEs and Micro Enterprises • Require all banking institutions to ensure that the
SMEs and micro businesses affected by the epidemic can make credit balance and the number of households of small and micro
applications with banks to defer repayment of principal and businesses and individuals in the first half of 2020 are not lower
interest expenses payable from January 25 to June 30, 2020. than that of the same period in 2019.
Overdue loan repayments in the period will not be subject to • For catering, accommodation, tourism, trade,
penalties. Before the end of June, enterprises can also apply for transportation and other industries that are greatly affected by
deferred payment of the housing fund. the epidemic, banks are encouraged to reduce the original loan
interest rate by more than 10%.
Extension of Tax Filing Deadline • Policy-based financing guarantee companies at the
According to the latest Circular issued by China’s State municipal and district levels will cancel the counter-guarantee
Administration of Taxation, the tax declaration deadline in May requirements, and the guarantee rate of the affected enterprises
is postponed to May 22, 2020, nationwide. Taxpayers who still will be lowered by 1% point compared with the same period last
have difficulties in meeting the new deadline due to the severe year.
impact of the epidemic can apply to the relevant tax authorities • In 2020, the Bank of Guangzhou and the Rural
for further extensions. Commercial Bank of Guangzhou plan to increase loans to micro,
small and medium-sized enterprises by 57 billion yuan and cut
Supporting the “Difficult Industries” the interest rate for new loans to micro, small and medium-sized
Transportation, catering, accommodation, tourism industries enterprises across the board, by no less than 10% compared with
are categorized as “difficult industries”. For losses incurred the same period last year.
by enterprises in difficult industries seriously affected by the
epidemic in 2020, the maximum carryover period may be Dongguan
extended from five years to eight years.
• The qualified enterprises, including the "Made In
Measures at Local Level (Selected cities in Guangdong Dongguan" brand exhibition and sales center outside the
Province) province, shall be given subsidies of up to 1 million yuan.
• Provide employment subsidies to enterprises that
Overview directly recruit employees who are employed in Dongguan for
the first time, expand social insurance subsidies for small and
Local governments mainly formulate policies from the following micro enterprises to college graduates within two years after
two aspects: graduation, and provide one-time employment subsidies to
• Reducing labor cost, social insurance premium enterprises that recruit employees who register unemployment
and housing fund, e.g. SMEs are exempted from pension, for more than half a year.
unemployment and industrial injury insurance expenses borne • 30 million yuan arranged for the development of local
by enterprises from February to June 2020. mask production equipment enterprises, providing subsidies for
• Launching preferential tax policies, e.g. the VAT enterprises to produce and sell mask machine.
rate of small-scale taxpayers will be reduced from 3% to 1%; • Set up 10 million yuan of special funds, giving no
Measures for tax deduction and exemption will be provided for more than 12% of the subsidies to insurance products related to
resuming work and production of the enterprise products.
17 AMCHAM SOUTH CHINA
Following the implementation of various measures, we believe
that China's domestic market and its competitive advantages in
attracting foreign investment will remain unchanged. The central
and local governments are expected to roll out further stimulus
measures for various industries. Companies should keep a close
eye on these developments, evaluate their operations in China,
and make prompt applications if they are eligible to benefit from
these incentives and supporting measures.
