Law and regulation of Covid-19 tax relief in China

Value Added Tax

  • Manufacturers of key epidemic control supplies (“Key Supplies”) entitled to full refund of incremental uncredited input VAT
  • Revenues from transporting Key Supplies exempt from VAT
  • Revenues from providing public transportation services, lifestyle services and courier services delivering the life necessities are exempt from VAT
  • Small-scale VAT payer subject to a low VAT levy rate of 1% through May 2020
  • Deferral of filing deadlines

Corporate Income Tax

  • Industries severely affected by the epidemic allowed to carry forward the tax loss of 2020 for 8 years
  • Cost of donation of Key Supplies are fully deductible
  • Cost of new equipment acquired by enterprises producing Key Supplies to enhance the production capacity can be deducted in a one-off manner without depreciation over the use life
  • Deferral of filing deadlines

Social Security Contributions or Payroll Tax

  • Cost of donation of cash or Key Supplies are fully deductible
  • Temporary working allowances and bonuses obtained by medical workers in epidemic prevention and control are exempt from Individual Income Tax (“IIT”)
  • Medicines, healthcare supplies and protection supplies offered by the employers to the individuals for epidemic prevention are exempt from IIT
  • Exemption or half-reduction of social security contributions for no more than 5 months
  • Deferral of filing or contribution deadlines

Other relief measures

  • Foreign-donated supplies used to prevent and control the epidemic can be exempt from import taxes

Additional comments

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