Since the end of January 2020, COVID-19 has been widely affecting regular operations of enterprises in China. As a result, Chinese governments have issued various regulations to support enterprises in this difficult period. In order to better understand and benefit from relevant regulations applicable to foreign-invested enterprises, this article lists out helpful national and regional regulations of Guangdong, Beijing and Shanghai where foreign-invested enterprises are mostly located. 

National Regulations

I. Tax Regulations

The statutory deadline of tax declaration for February 2020 is extended to February 28, 2020. Further extensions will be available upon approval.

II. Financial Regulations

1. Corporate taxes

1) Enterprises manufacturing epidemic prevention supplies are entitled to a full refund of the increased part of retained VAT on a monthly basis (from the end of December, 2019).

2) The income from transportation of epidemic prevention materials is exempt from VAT.

3) The losses suffered by enterprises in the most affected industries (i.e. industries of transportation, catering, accommodation, and tourism) are allowed be divided and consolidated in 8 years.

2. Personal income tax: epidemic prevention supplies (medical or protective) distributed to employees by enterprises for epidemic prevention are not calculated into employees’ wages, which as a result are exempt from personal income tax.

3. Requirements on enterprises manufacturing or donating epidemic prevention supplies will be less restrictive in terms of import and export, foreign exchange, and cross-border financing. Foreign exchange transactions through online means such as mobile banking are highly recommended. The State Administration of Foreign Exchange (“SAFE”) encourages the foreign exchange operations through the website “Online Processing System  for State Administration of Foreign Exchange Service”.

III. Human Resources and Social Security

1. Employers may take measures such as adjusting salary, arranging annual leaves and days off, applying for work shifts, reducing working hours, etc.. It is suggested to inform the employees in writing in advance and obtain their consent while any adjustment needs to be carried out.  

2. Social insurance payment: the employers’ payment of social insurance can be made without penalties within three months from the day where the epidemics period terminates if the delay is due to the 2019-nCoV.

3. Employment:

1) 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 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”. The specific procedures shall be determined by the local governments.

2) Training is encouraged. Under the conditions of epidemic prevention, enterprises can organize employees to participate in online training during the shutdown and recovery period, which will be possible to be subsided.

Regulations of Guangdong Province

I. Guangdong Province

1. Food production enterprises are entitled to privileges such as VAT exemption for the circulation of vegetables, meat and egg products; adjustment of VAT, property tax, urban land use tax and stamp tax for state reserve commodities; and adjustment of urban land use tax for certain storage facilities.

2. For small-sized enterprises in the industries of catering, accommodation, and other industries that are heavily affected by the epidemics and have not been fully resumed production in a timely manner, larger-scale tax privileges will be available depending on cases.

3. Property tax and urban land use tax will be further deducted upon application in the cases where it is impractical for enterprises to fully complete tax obligations due to the epidemics.

II. Guangzhou City

1. Employment

1) Rate of unemployment insurance is adjusted as follows: the original payment ratio of 0.6 is reduced 0.4, and the original payment ratio of 0.8 is reduced to 0.6. This adjustment is valid until the end of December 2020. 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 year upon approval. Online service is available.

2) Subsidy of RMB 200,000 will be awarded to enterprises resuming production of protective masks, protective clothing, goggles, thermometers, virus detection supplies, disinfection supplies, drugs and vital medical equipment before February 10, 2020 in Huangpu District, Development Zone, and High-tech Zone of Guangzhou. If the above-mentioned enterprises newly purchase equipment to carry out the aforementioned production activities before February 10, subsidies will be awarded according to 80% of the equipment purchase price with a cap of RMB 1 million for each enterprise.

2. Rent Reduction:

1) For small and medium-sized enterprises that lease properties from local state-owned enterprises for offline business, if there is no outstanding rent at present, the rents of for February and March 2020 will be exempted.

2) The wholesale market operators   who are entitled to the aforementioned exemption shall exempt at least the same amount for the rent for two months obligated by the tenant merchant on the site.

III.  Shenzhen City

1. Employment

1) During the epidemic prevention period, 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 year upon approval. Insured enterprises with difficulty in operation but still with zero or low layoffs are entitled to at least 25% of the social insurance premiums they paid for the previous year upon approval. The salaries enterprises shall pay to the employees who received medical treatment due to the epidemic or was quarantined for medical observation shall be subsidized to the enterprise at a rate not exceeding 50% of the basic pension insurance premium payment base.

2) Training subsidy: For enterprises that organize employees to participate in job needed skills training in 2020, the position training subsidy is increased to maximum of RMB 1,500, and for skill improvement subsidy is increased to maximum of RMB 2,000. Enterprises shall file the training plan to the local human and social departments where the enterprise is located separately before training.

3) The rate of housing fund will be reduced. For enterprises affected by the epidemic and having difficulties in contributing housing funds, they can apply to reduce the housing fund portion to a minimum of 3% but the period shall not exceed 12 months; or apply extent the deadline of housing fund payment but the period shall not exceed 12 months.

4) Enterprises affected by the epidemic are entitled to a refund of 6-month urban sewage treatment fees.

5) The city's industrial and commercial enterprises are exempted from paying the basic electricity charges in February, 2020.

6) Enterprises affected by the epidemic are exempted from 3 months of property tax and urban land use tax.

2. Rent Reduction:

1) For non-state-owned enterprises renting state-owned property, 2 months of rents will be exempted.

2) For non-state-owned enterprises that rent premises for social or talent promotion use, 2 months of rents will be exempted.

IV. Zhuhai City

For enterprises that are suffering difficulties in operation because of their employees who are still in Hubei and unable to come back to their positions on time, they may apply to the government for delayed resumption subsidies. From February 5, 2020 to three months after the end the epidemic outbreak, if the enterprises recruit new employees and pays social insurance premiums, a one-time subsidy will be awarded. The standard of the subsidy is RMB 500 per newly recruited employee. The maximum subsidy for each enterprise is RMB 1 million. Enterprises are encouraged to organize on-the-job training. After completing the training tasks and the training results meeting the requirements of the plan, a one-time subsidy will be awarded according to the actual number of participants, if the training tasks are achieved. The standard of the  subsidy is RMB 30 per lesson per person (no less than 45 minutes), and the maximum subsidy is RMB1,000. Enterprises shall file the training plan before training to the local human and social departments where the enterprise is located .

V. Foshan City

Encourage the importation of epidemic prevention materials: during the epidemic outbreak, enterprises that import materials such as masks, protective clothing and other materials needed for epidemic prevention through general trade or cross-border e-commerce is qualified to get a refund of no more than10% of their import amount upon application. The maximum amount for a single enterprise shall not exceed RMB 1 million; for enterprises that need to purchase China Export Credit Insurance for the purpose of importing masks, protective clothing and other epidemic prevention materials can get the full refund of the insurance but shall not exceed RMB 200,000.

VI. Dongguan City

1. Employment

1) Insured enterprises with zero or low layoffs are entitled to at least 50% of the unemployment insurance premiums they paid for the previous year upon approval. Insured enterprises with temporary difficulty in operation but still with zero or low layoffs are entitled to be refund of 50% of the 6-month local monthly unemployment insurance premium and the number of employees insured or the 6-month enterprise and its employees which is implemented in accordance with national and provincial regulations.

2) In heavily affected industries of manufacturing, wholesales, catering, accommodation, commercial and service, tourist industry, transportation, and others, the enterprises are allowed to delay the deadline of electricity and water utility fee during the epidemic period

3) For enterprises that build their own market expansion centers overseas and meet the relevant requirements, a one-time funding of RMB 1 million will be provided for each project; 50% of the company's stand and special installation fees will be provided for participating in qualified exhibitions but limited to RMB 100,000 per exhibitor per exhibition. The subsidy for export credit insurance raise from 20% to a maximum of 50% but limited to RMB 3 million per enterprise.

4) Providing subsidy of RMB 80,000 per set and RMB 50,000 per set respectively for full-automatic folding mask machines and full-automatic flat mask machines. 5% of purchase price will be subsided for other type of mask machines. The maximum amount of subsidy for each enterprise will not exceed RMB 3 million.

2. Rent deduction. Enterprises that rent administrative institutions, public or collective owned property are exempted from 2 months of rent.

Regulations of Beijing

I.  Tax Regulations

Similar to the national regulations above; for the losses suffered by enterprises in the most affected industries (i.e. industries of tourism, accommodation, catering, exhibition, commercial circulation, transportation, education and training, theatrical performance, film and television theatre, ice and snow sports), the statutory deadline of tax declaration will be extended to the end of July, 2020 upon approval.

II. Social Insurance

See national regulations above; the statutory deadlines of tax declaration for January, 2020 and February 2020 are extended to the end of March, 2020.

III. Employment

1) Insured enterprises with zero or low layoffs are entitled to refund the unemployment insurance premiums for six months, according to the standard for “the municipal unemployment insurance per capital in 2019” and the number of employees participating in the unemployment insurance upon approval.

2) For small and medium-sized enterprises in line with the industrial development policies: i) if its average number of employees by the end of April, 2020 is in line or upper of the average number in 2019 or increases by less than 20% (exclusive), a one-time subsidy will be awarded to enterprises. The amount of the subsidy is 30% of the social insurance premiums in three months; ii) if its average number increases by more than 20% (including), the lump-sum subsidy will be awarded to enterprises. The amount of the subsidy is 50% of the social insurance premiums in three months.

3) Enterprises entitled to the aforesaid policies: i) will be subsidized RMB1,000 per person for training if they organize their employees to participate in the professional skills training; ii) log on to the official website (http://www.rsj.beijing.gov.cn) to apply.

4) If enterprises recruited the registered unemployed persons or urban/rural residents with difficulties in finding jobs, sign labor contracts with one year or more, pay social insurance premiums for employees and pay wages not less than 1.2 times of the minimum wages of employees in Beijing, they may apply for employment subsidies and social insurance subsidies. The standard of employment subsidy is RMB 8,000 per person per year.

5)  Research and Development (R&D) Subsides

For the R&D small-sized enterprises in Zhongguancun Science Park, the R&D expenses subsidy will be awarded according to the R&D investment expenses. The subsidy shall not exceed RMB 200,000.

IV. Rent Reduction

1) For small and medium-sized enterprises that lease properties from local state-owned enterprises o for production and operation activities, if they maintain business or are closed down according to government requirements with no or less redundancy, the rent for February, 2020 will be exempted.

2) For small and medium-sized enterprises that lease properties from local state-owned enterprises for offline business, the rents for February, 2020 will be exempted by 50%.

Regulations of Shanghai

I.  Social Insurance

Similar to the national Regulations above; the statutory starting and ending dates of the annual social insurance payment for employees (including Medical Employee Insurance year) are both extended for 3 months. The new starting and ending dates are 1 July, 2020  and 30 June, 2021(the annual social insurance payment of 2019 is delayed accordingly to 1 July 2020).

II. Employment

1) Insured enterprises with zero or low layoffs are entitled to refund 50% of the total unemployment insurance premiums actually paid by the employer and its employees in 2019 upon approval. The rate of medical insurance for employees is temporarily reduced by 0.5% in 2020.

2) For the enterprise affected by the epidemic, if they organize the employees (including the labor dispatch personnel working in the enterprise) to participate in online training during the shutdown, the subsidies will be awarded to the enterprises according to 95% of the actual training expenses. The training expenses shall not exceed RMB 600 per person per training program. The enterprise shall file a record with the department of human resources and social security.

III.  Rent Reduction

For small and medium-sized enterprises that lease properties from local state-owned enterprises  for production and operation activities, the rents for February 2020 and March 2020 shall be exempted; offices and shopping malls (i.e. large commercial buildings, shopping malls, parks etc.) are encouraged to reduce or exempt the rents of their lessees.

IV. Subsidy (for epidemic prevention materials)

1) Technology Promotion Subsidy

For emergency requisition enterprise, financial subsidies shall be awarded at 50% -  80% of the total investment in emergency technical transformation projects carried out by producing epidemic prevention materials.

2) For emergency requisition enterprise: i) if they produce government-specified epidemic prevention materials, its investment in upgrading production capacity will be subsidized. The maximum amount of the subsidies will be 100%. ii) after epidemic prevention, if it is really difficult to continue to sell the remaining materials produced by the government requisition, such materials shall be purchased by government.

3) For the imported medical materials, their surplus of imported after overall deployment will be included in municipal-level material reserves in accordance with laws and regulations.

4) For the civil imported epidemic prevention materials, if they are difficult to sell out after epidemic period, they will be purchased by the local government upon approval.