Personal tax

Deferral IIT payments: allowing self-employed industrial and commercial households (SICHs) to defer the payments of IIT until the first tax filing period of 2021.

Business tax

Reduction of taxable income:

1. Interest income derived by financial institutions for extending small loans to farmers is entitled to 10% deduction (CIT rate is at 25%)

2. Premium income derived from insurance services provided to businesses engaging in planting as well as breeding and poultry raising is subject to CIT at a 10% reduction (by the end of 2023)

Deferral of CIT payment: Small-sized enterprises with meager profits will be allowed to defer their CIT payments to the first tax filing period of 2021

CIT filing extension: Filing deadline for January 2021 has been extended from 20 to 31 January 2021 in certain areas with lockdown approach adopted under the context of multiple new COVID-19 cases confirmed.

Certain local governments have granted the extension of this exemption until 30 June 2021 (e.g., Shandong).

Western Regions: Mainland China extends the validity of15% CIT rate for qualified enterprises engaged in encouraged industries in the Western Regions to the end of 2030. The criteria have also been lowered.

(Updated: May 2022) 

VAT:  

(1) VAT exemptions for "lifestyle services" (normally subject to a 6% rate) including medical services, catering and accommodation services, "sundry personal services" including hairdressing and laundry, as well as public transportation and express delivery services provided to individuals. 

(2) A full refund of carried forward excess input VAT credits, granted to businesses engaged in production of supplies for COVID-19 protection and containment. 

(3) VAT-exemption of sales by "small-scale taxpayers" in Hubei province and reduction of the VAT rate applicable to "small-scale taxpayers" in other areas from 3% to 1%, from March 1 to May 31, 2020. (It has been extended to 31 December 2020.) 

(4) Individual taxpayers ("sole traders") that have elected for taxation under the normal VAT regimes (i.e. to be treated as "general taxable persons") for less than 36 months, may reverse their decision and apply for a refund of VAT applied on exports (and VAT exemption of future exports). 

(5) Tax incentives have been intensified for small and micro enterprises (SMEs) and self-employed businesses from Mar.1 to Dec.31, 2020. Small scale taxpayers of VAT nationwide, whose sales income is subject to 3% VAT rate, can enjoy a lowered VAT rate of 1%. 

(6) Donations made in cash or in kind to help combat COVID-19 are exempt from VAT and other consumption taxes. 

PIT：  

(1) PIT exemptions for bonuses and subsidies paid to medical staff working in combatting COVID-19. 

(2) Tax authorities in Hubei province are urged not to withhold individual income tax from "sole traders" and "partnership enterprises" when these taxpayers issue VAT invoices for cargo transportation services. (Note: normally, a prepayment of individual income tax is withheld when "sole traders" and "partnership enterprises" issue VAT invoices orn cargo transportation services). 

(3) Donations made by enterprises or individuals through qualified Public Benefit Organisations or government authorities can be fully deducted for PIT purposes. 

CIT:  

(1) For seriously affected businesses in certain sectors (transport, catering, accommodation and tourism), increase loss-carry forward from 5 to 8 years for losses incurred in 2020. 

(2) Specific CIT incentives for enterprises engaged in producing key supplies related to COVID-19 protection and containment. This includes 100% expensing for investment in equipment to expand production capacity. In contrast to standard tax rules, there is no limit to the scale of the investment such that larger scale investments also benefit from the immediate expensing. 

(3) Donations made by enterprises or individuals through qualified Public Benefit Organisations or government authorities can be fully deducted for CIT purposes. 

SSCs:  

Temporary waiver of the contributions made by enterprises for their employees' endowment insurance, unemployment insurance and employment injury insurance. A nationwide maximum 5- month and 3- month contribution holiday was granted to micro, small and medium-sized enterprises and large businesses (50%? or 100%? - tbc), respectively. This reduction also applies to the self-employed. In addition, the employer SSC for basic medical insurance can be reduced by 50% for 5 months for all firms (if approved by the respective province where the business is located). 

SMEs nationwide have the waiver of contributions for their employee's endowment insurance, unemployment insurance and employment injury insurance from Feb. to Dec.2020; employer SSC contributions from large scale enterprises and other participants (government departments and public institutions are excluded) are reduced to half from Feb. to Jun. 2020 nationwide. 

Other：  

(1) Donations made in cash or in kind to help combat COVID-19 are exempt from VAT and other consumption taxes. In addition, donations made by enterprises or individuals through qualified Public Benefit Organisations or government authorities can be fully deducted for CIT and PIT purposes. 

(2) The deadline for tax filing in February, 2020, was extended to the last working day of that month outside of Hubei province and to the end of March 2020 in Hubei province, and the deadline for tax filing in March 2020 has been extended nationwide by one week. 

(3) A series of measures to facilitate export tax refunds has been introduced to provide export enterprises with simpler tax filing obligations and accelerated tax refund processes. 

(Updated: August 2020)