China – tax measures in response to COVID-19

The Chinese government authorities (including the Ministry of Finance, the State Taxation Administration,etc.) have released series of policy and tax measures in response to COVID-19 situation. The main indirect tax measures include:

A. Expanding the scope for VAT exemption

The importation of goods and materials needed to overcome the COVID-19 crisis is eligible for VAT exemption treatment.

The income derived from the transportation of the important goods and materials needed to overcome the COVID-19 crisis is included in VAT exemption scope.

In addition, the taxpayers in the following industries are eligible for temporary VAT exemption treatment for relevant income starting from 1 January 2020:

  • Public transportation
  • Consumer services
  • Postage/courier services to deliver daily necessities to residents

When the temporary VAT exemption treatment will come the an end has not yet been announced.

B. VAT preferential policy for small-scale VAT Payers

  • Small-scale VAT payers located in Hubei Province is exempted from VAT temporarily
  • For small-scale VAT payers located outside Hubei Province, the VAT levy rate (under the simplified VAT calculation method) is reduced from 3% to 1%

C. Expanding the scope of VAT exemption treatment on qualified donation

The donation of goods to charitable organization, municipal and upper-level government bodies and hospitals responsible for COVID-19 treatment is eligible for VAT exemption treatment (instead of deemed sales VAT treatment).

D. Refund of excess input VAT credit

For qualified key materials production enterprises,100% of incremental amount of excess input VAT credit will be refunded.

E. Extension of the due date of monthly VAT filing

The filing due date for February and March 2020 is extended for two weeks and one week respectively.

The links for some of the key indirect tax policies are listed below (in Chinese only).

http://gss.mof.gov.cn/gzdt/zhengcefabu/202002/t20200201_3464830.htm
http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143135/content.html
http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5144080/content.html
http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143465/content.html
http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143464/content.html
http://www.chinatax.gov.cn/chinatax/n810341/n810755/c5143593/content.html

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