Information is continuing to emerge on COVID-19 and the resulting legislative changes being instituted in China. We have compiled a list of important updates for Chinese employers to be aware of. Our teams are closely monitoring the situation and will continue to provide the latest updates to keep you informed.
COVID-19 Updates - China
Last Updated – March 25, 2020
Social Security Contribution
Employers will receiver temporary relief from February to June 2020
- Small and Medium Sized Company (SMBs): Full exemption from Old age pension contribution, unemployment insurance contribution and work-related injury insurance contribution
- Large Companies Exemptions: 50% exemption from old age pension contribution, unemployment insurance contribution, and work-related injury insurance contributions
Value Added Tax (VAT)
- Value-added tax has been reduced from 3 % to 1 % under cash accounting scheme for small businesses till the end of May 2020
- Some taxpayers (small scale) can issue special VAT Invoices from February 01, 2020
- Donation by businesses or individuals in form of funds and goods for epidemic prevention can be deducted from income tax computation.
- Severely hit companies can carry forward losses incurred in year 2020 for the period of 8 years
- Income earned in epidemic prevention and control period such as transportation of epidemic prevention related supplies, lifestyle services, necessity delivery services etc. exempted from VAT
Housing Provident Fund
Companies can apply for deferring payment related to Housing provident fund. They will have a grace period for paying the contribution till June 2020.
Organizations impacted by COVID-19 may be eligible to apply to defer social contribution payments. Some of the conditions for eligibility include:
- The company has experienced a decrease of 50% in monthly revenue compared to Q4 2019
- The company is not included on a list of companies that have been caught to be dishonest with social security payments
- The company must commit to ensuring that the social insurances are paid before the expiration of the deferred payment date
- The company must continue to withhold employee contributions as per the law. If the employee agrees, the payments of withheld contributions can be deferred as well without penalty.
- The duration of the deferment should not exceed more than 6 months and this plan will end on December 20, 2020. No late fees or penalties will be applied during this time