China

Including PRC & Hong Kong

Welcome to the high-level summary of Covid-19 related actions by the Chinese Government. The details and links below have been split between “Tax Filings Affected”, “Government Employee Wages Benefits Programs” and “Government Loan and Support Programs”; and are simply extracts from the more detailed information available on the websites of the Chinese Praxity Participant firms’ websites, links to which are available at the bottom of this page. Praxity Participant Firms in China are Mazars, ShineWing CPA, Plante & Moran, and Pirola Beijing Consulting Co., Ltd.

Mainland

Tax Filing Affected

VAT

  • The imported materials donated for epidemic prevention and control shall be exempted from custom duties, VAT and consumption tax.
  • Enterprises producing key materials for epidemic prevention and control may apply for full refund of the incremental VAT credit on a monthly basis.
  • VAT shall be exempted from income from the transportation of key materials for epidemic prevention and control.
  • VAT shall be exempted from the income derived from taxpayers' provision of public transportation services and daily life services, as well as the provision of express delivery services for residents' essential daily supplies.
  • Enterprises and individual business donating goods that are self-manufactured, consigned processed or purchased for handling the epidemic through public welfare social organizations and the people's governments, shall be exempted from VAT and consumption tax, urban maintenance and construction tax, local surcharge.
  • From May 1, 2020 to the end of 2023, second-hand car dealers will be subject to a reduced VAT (at the rate of 0.5% instead of the previous 2%) on sales of used cars.
  • The subsidy for new energy vehicles and exemption from vehicle purchase tax will be extended to December 31, 2022.
  • The deadline for tax filing in April 2020 has been extended from 20 April to 24 April.

Corporate Income Tax measures

  • For the newly purchased equipment of key material manufacturers for epidemic prevention and control to expand production capacity, the company can claim one-time deduction for the assets purchased before CIT.
  • The loss incurred in 2020 can be carried forward for eight years for companies engaged in catering, hotels, tourism, transportation industries, which are greatly affected by the epidemic.
  • Donations of cash and materials through public welfare social organizations or people's governments at or above the county level and their departments or to hospital to deal with COVID19 can be fully deducted before the enterprise income tax.

Other Taxes

  • Individual income tax shall be exempted from the temporary work subsidies and bonuses obtained by medical personnel and epidemic prevention workers who participate in epidemic prevention and control work in accordance with the standards set by the government.
  • Individual income tax shall be exempted from the temporary work subsidies and bonuses obtained by medical personnel and epidemic prevention workers who participate in epidemic prevention and control work in accordance with the standards set by the government.
  • During the epidemic prevention and control period, if it is really difficult to pay property tax or urban land use tax for enterprises whose real estate or land has been requisitioned by the government in an emergency, they may apply for reduction or exemption of corresponding property tax or urban land use tax.

Customs Measures

  • The imported materials donated for epidemic prevention and control shall be exempted from custom duties.

Tax Audits and Controversies

  • During the period of epidemic prevention and control, if the taxpayer has difficulty in handling the declaration within the statutory time limit due to the impact of the epidemic, it may apply for a further extension. Where it is difficult to pay tax on time due to the impact of the epidemic, if the conditions for deferring tax payment are met, a deferring of tax payment shall be granted in accordance with the law and the maximum period shall not exceed 3 months. Taxpayers who fail to report or pay tax on time due to the impact of the epidemic may be exempted from the corresponding overdue fine and tax administrative penalties upon confirmation by the competent tax authorities.

Government Employee Wages Benefits Programs

Unemployment Refunds According to the notice from the local government in Shanghai, Insured enterprises with zero or low layoffs are entitled to refund of at least 50% of the unemployment insurance premiums they paid for the previous one year, Year 2019 from Jan to Dec, upon approval. For small and medium-sized enterprises, the threshold of layoff rate for this policy is extended to “not higher than the target of the unemployment rate control of the national urban survey in the previous year (i.e. 5.5%)”. If there are less than 30 insured employees in an enterprise, the layoff threshold will be extended to “not more than 20% of the total number of employees in the enterprise”. If your company meets the above requirements, you could apply for the refund from March to December 2020 by yourself or the agent who handles the social insurance. The application of the refund can be submitted on-site or on-line: https://zzjb.rsj.sh.gov. Once the application is submitted, the refund may reach the company account in one month.

Government Loan and Support Programs

National measures:

  • Enterprises that have serious difficulties in production and operation affected by the epidemic may apply for a holdover (6 months) of social insurance premiums without overdue fine.
  • Exempt the employer contribution part of the pension, unemployment and injury insurance for all types of insured companies in Hubei province from February to June 2020.
  • Exempt the employer contribution part of the pension, unemployment and injury insurance for proprietorship from February to June 2020.
  • Exempt the employer contribution part of the pension, unemployment and injury insurance of micro-small and medium-sized enterprises from February to June 2020.
  • Exempt half of the employer contribution part of the pension, unemployment and injury insurance of large scale enterprises from February to April 2020.

Local measures:

  • Local governments have issued local financial support to companies, such as waiving of rental, reduce the social contribution ratio, refund of part of the social contribution paid in 2019, subsidize the company for training expenses incurred, etc.

HongKong

Tax Filing Affected

Corporate Income Tax measures The Hong Kong Inland Revenue Department ("HKIRD") will delay its issuance of Hong Kong Profits Tax ("HKPT") return for the Year of Assessment ("Y/A") 2019/20 to 4 May 2020. Generally, taxpayers are required to submit theirs HKPT returns by 3 June 2020. For taxpayers who appoint tax representatives to handle their Y/A 2019/20 HKPT returns, the HKIRD will grant extension of time for filing their HKPT returns to the following dates: For taxpayers with accounting year end date of:

  • 1 April 2019 to 30 November 2019: 30 June 2020;
  • 1 December 2019 to 31 December 2019: 17 August 2020;
  • 1 January 2020 to 31 March 2020: 16 November 2020.

Other Taxes The HKIRD will delay its issuance of Hong Kong Salaries Tax ("HKST") return for Y/A 2019/20 to 1 June 2020. Generally, taxpayers are required to submit theirs HKST returns by 30 June 2020. For taxpayers who appoint tax representatives to handle their Y/A 2019/20 HKST returns, the HKIRD will grant extension of time for filing their HKST returns to the following dates:

  • For cases not involving sole proprietorship business accounts: 3 August 2020;
  • For cases involving sole proprietorship business accounts: 2 November 2020.

Government Employee Wages Benefits Programs

Employment Support Scheme: To combat the impacts of COVID-19 in Hong Kong, the Government has announced a second round of Anti-epidemic Fund for HK$137.5 billion on 8 April 2020 which was approved by LegCo on 18 April 2020. It is a further response to the HK$120 billion relief package in the 2020-21 Budget announced on 26 February 2020 and the HK$30 billion Anti-epidemic Fund approved by LegCo on 21 February 2020. A new Employment Support Scheme (“ESS”) of HK$81 billion was introduced to help business and retain workers in employment.

  • The Government will provide wage subsidy to eligible employers to retain the latter’s employees. Employers must undertake that they cannot implement redundancy.
  • All employers who have been making Mandatory Provident Fund (MPF) contributions for employees are eligible, except those on the exclusion list (employees of the HKSARG, statutory bodies and Government subverted organizations)
  • The wage subsidy to be provided by the Government is calculated based on 50% of the monthly salary, which is capped at $18,000 (i.e. the median monthly wage in Q2 2019), for a period of six months.
  • To be disbursed to employers in two payments, with the first not later than June 2020. Expect to benefit 1.5 million employees
  • To provide support to employers in the catering, construction, and transport (mainly taxi and red minibus drivers) sectors which are not completely covered by the MPF scheme (involving about 800,000 persons)
  • To grant a one-off subsidy to self-employed persons who made MPF contributions (about 215,000 persons)
  • See government site for additional details.

Government Loan and Support Programs

Taxpayers who encounter financial difficulties in settling their tax bills on time can apply to the HKIRD for payment of tax by installments. For installment plans approved by the HKIRD for Y/A 2018/19, provided that the installment plans are duly adhered to, no surcharge (i.e., generally at 5% or 10% depending on the circumstances) will be imposed for a maximum period of one year counting from the respective due dates of the demand notes.

Tax payment deadlines for HKST, Personal Assessment (“PA”) and HKPT demand notes for Y/A 2018/19 which fall between April to June of 2020 are automatically extended by three months. If taxpayers for HKST, PA and HKPT have already settled the first payment in accordance with the demand note for Y/A 2018/19, the deadline for the second payment is automatically extended for three months from the date specified on the demand note. The above relief measure is not applicable to taxpayers who have to settle their tax liabilities before departing Hong Kong, taxpayers paying property tax and taxpayers who have been approved to pay their taxes by instalments. The HKIRD announced on 4 April 2020 that deadlines for tax payments and lodgment of objections and holdover applications as well as submission of tax returns and information that fall between March 23 and May 2 are automatically extended to May 4. $10,000 cash payout to Hong Kong permanent residents aged 18 or above A concessionary low-interest loan up to $2 million with a 100% government guarantee for enterprises, which will be open for application for 6 months, with repayment period up to 3 years The Hong Kong Monetary Authority has reduced the countercyclical capital buffer for Hong Kong from 2.0% to 1.0% to encourage the banking sector to continue supporting the financing need of SMEs in Hong Kong.

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Further Covid-19 advice

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The information contained herein on Covid-19 government measures within the G8, consists solely of information that can be found on the websites of one or more Praxity Participant firms, and has not been written, modified or verified by Praxity, it’s staff, officers or directors.