In the face of the severe situation of the prevention and control of pneumonia caused by the novel coronavirus infection, the relevant departments of the Central Government and the Autonomous Region have thoroughly implemented the spirit of a series of important instructions from General Secretary Xi Jinping, resolutely implemented the decisions and deployments of the Party Central Committee and the State Council, fully participated in the prevention and control work, and successively introduced a series of tax preferential policies to help various market entities and taxpayers reduce burdens, improve their ability to resist risks, and optimize the overall business environment.

 

I. List of 12 Financial and Tax Preferential Policies Issued by the Ministry of Finance and the State Taxation Administration

 

(I) 2 Tax Preferential Policies to Support Prevention and Treatment

 

1. Exemption of individual income tax for temporary work subsidies and bonuses obtained by government-stipulated standards for epidemic prevention and control;

 

2. Exemption of individual income tax for medicine and protective equipment for the prevention of pneumonia caused by novel coronavirus infection issued by individuals' employers.

 

(II) 5 Tax Preferential Policies to Support Material Supply

 

3. Full refund of incremental VAT credit to key epidemic prevention and control material production enterprises;

 

4. Exemption of VAT for taxpayers' income from providing transportation of key epidemic prevention and control materials;

 

5. Exemption of VAT for taxpayers' income from providing public transportation services, living services, and express delivery services for residents' daily necessities;

 

6. Allowing one-time deduction before enterprise income tax for equipment purchased by key epidemic prevention material production enterprises to expand production capacity;

 

7. Exemption of tariffs for materials directly used for epidemic prevention and control imported by health authorities.

 

(III) 4 Tax Preferential Policies to Encourage Public Welfare Donations

 

8. Allowing full deduction before enterprise income tax or individual income tax for cash and goods donated through public welfare social organizations or state organs such as county-level or higher people's governments and their departments to combat the epidemic;

 

9. Allowing full deduction before enterprise income tax or individual income tax for goods donated directly to hospitals undertaking epidemic prevention and control tasks to combat the epidemic;

 

10. Exemption of VAT, consumption tax, urban maintenance and construction tax, education surcharge, and local education surcharge for gratuitous donations of goods to combat the epidemic;

 

11. Expanding the scope of tax-free imports for donations.

 

(IV) 1 Tax Preferential Policy to Support Resumption of Work and Production

 

12. The maximum carry-forward period for losses incurred in 2020 by enterprises in difficult industries that are significantly affected by the epidemic is extended to 8 years.

    

II. Specific Interpretation of the 12 Financial and Tax Preferential Policies Issued by the Ministry of Finance and the State Taxation Administration

 

1. Exemption of individual income tax for temporary work subsidies and bonuses obtained by government-stipulated standards for epidemic prevention and control

 

Beneficiary : Medical personnel and epidemic prevention workers participating in epidemic prevention and control work

 

[Policy Basis] Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 10)

 

[Preferential Content] From January 1, 2020, individual income tax shall be exempted for temporary work subsidies and bonuses obtained by medical personnel and epidemic prevention workers participating in epidemic prevention and control work according to government-stipulated standards. Government-stipulated standards include the subsidy and bonus standards stipulated by governments at all levels.

 

The temporary work subsidies and bonuses for personnel participating in epidemic prevention and control stipulated by provincial and higher-level people's governments shall be implemented by analogy.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

2. Exemption of individual income tax for medicine and protective equipment for the prevention of pneumonia caused by novel coronavirus infection issued by individuals' employers

 

Beneficiary : Individuals who receive medicines, medical supplies, and protective equipment (excluding cash) issued by their employers for the prevention of pneumonia caused by novel coronavirus infection.

 

[Policy Basis] Announcement of the Ministry of Finance and the State Taxation Administration on the Individual Income Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 10)

 

[Preferential Content] From January 1, 2020, the medicines, medical supplies, and protective equipment (excluding cash) issued by employers to individuals for the prevention of pneumonia caused by novel coronavirus infection shall not be included in wages and salaries and shall be exempt from individual income tax.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

3. Full refund of incremental VAT credit to key epidemic prevention and control material production enterprises

 

Beneficiary : Key epidemic prevention and control material production enterprises

 

[Policy Basis]

 

(1) Announcement of the Ministry of Finance and the State Taxation Administration on the Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 8)

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content] From January 1, 2020, key epidemic prevention and control material production enterprises can apply to the competent tax authority on a monthly basis for a full refund of the incremental VAT credit. The incremental VAT credit refers to the new increase in the ending VAT credit compared to the end of December 2019.

 

The list of key epidemic prevention and control material production enterprises shall be determined by the provincial and higher-level development and reform departments, and the industry and information technology departments.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

If a key epidemic prevention and control material production enterprise applies the VAT incremental credit refund policy, it shall apply to the competent tax authority for a refund of the incremental credit after completing the VAT tax declaration for the current period within the VAT tax declaration period.

 

4. Exemption of VAT for taxpayers' income from providing transportation of key epidemic prevention and control materials

 

Beneficiary: Taxpayers providing transportation services for key epidemic prevention and control materials

 

[Policy Basis]

 

(1) Announcement of the Ministry of Finance and the State Taxation Administration on the Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 8)

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content] : From January 1, 2020, VAT shall be exempted for the income obtained by taxpayers from transporting key epidemic prevention and control materials.

 

The specific scope of key epidemic prevention and control materials shall be determined by the National Development and Reform Commission and the Ministry of Industry and Information Technology.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

If a taxpayer's income from transporting key epidemic prevention and control materials is exempt from VAT, the urban maintenance and construction tax, education surcharge, and local education surcharge shall also be exempted.

 

Taxpayers who enjoy VAT exemption according to regulations can independently declare tax exemption without going through relevant tax exemption filing procedures, but they should keep relevant supporting materials for future reference. When handling VAT tax returns, the VAT tax return and the corresponding columns of the VAT Tax Reduction and Exemption Declaration Form should be filled in.

 

Taxpayers who are subject to VAT exemption policies according to regulations shall not issue VAT special invoices; if VAT special invoices have been issued, corresponding red-letter invoices shall be issued or the original invoices shall be cancelled, and then the VAT exemption policy shall be applied and ordinary invoices shall be issued. If a taxpayer has issued a special VAT invoice during the epidemic prevention and control period, and should have issued a corresponding red-letter invoice but failed to do so in a timely manner, the VAT exemption policy may be applied first, and the corresponding red-letter invoice shall be issued within one month after the expiration of the relevant VAT exemption policy.

 

If a taxpayer has declared the sales amount and sales quantity subject to the tax exemption policy as the taxable sales amount and sales quantity for VAT purposes, he can choose to correct the current declaration or adjust it in the next declaration. The VAT tax paid that should be exempted can be refunded or used to offset the VAT tax payable by the taxpayer in the future.

 

5. VAT exemption for taxpayers providing public transportation services, living services, and express delivery services for residents' daily necessities

 

Beneficiary : Taxpayers who provide public transportation services, living services, and express delivery services for residents' daily necessities

 

[Policy Basis]

 

(1) Announcement of the Ministry of Finance and the State Taxation Administration on the Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 8)

 

(2)《Notice on Comprehensively Promoting the Pilot Program of Replacing Business Tax with Value-Added Tax》(Cai Shui [2016] No. 36) by the Ministry of Finance and the State Administration of Taxation

 

(3)《Announcement of the State Administration of Taxation on Matters Concerning Tax Collection and Administration to Support the Prevention and Control of Pneumonia Infected by New Coronavirus》(Announcement No. 4 of 2020)

 

[Preferential Content] ：

 

From January 1, 2020, VAT shall be exempted for the income obtained by taxpayers from providing public transportation services, living services, and express delivery services for residents' daily necessities.

 

The specific scope of public transportation services shall be implemented in accordance with the Provisions on Relevant Matters Concerning the Pilot Program of Replacing Business Tax with VAT (issued by Finance and Taxation [2016] No. 36).

 

The specific scope of living services and express delivery services shall be implemented in accordance with the Notes on Sales Services, Intangible Assets, and Real Estate (issued by Finance and Taxation [2016] No. 36).

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

 VAT is exempt for the income obtained by taxpayers from providing public transportation services, living services, and express delivery services for residents' daily necessities, and urban maintenance and construction tax, education surcharge, and local education surcharge are also exempt. Taxpayers who enjoy VAT exemption according to regulations can independently declare tax exemption without going through relevant tax exemption filing procedures, but they should keep relevant supporting materials for future reference. When handling VAT tax returns, the VAT tax return and the corresponding columns of the VAT Tax Reduction and Exemption Declaration Form should be filled in. Taxpayers who are subject to VAT exemption policies according to regulations shall not issue VAT special invoices; if VAT special invoices have been issued, corresponding red-letter invoices shall be issued or the original invoices shall be cancelled, and then the VAT exemption policy shall be applied and ordinary invoices shall be issued. If a taxpayer has issued a special VAT invoice during the epidemic prevention and control period, and should have issued a corresponding red-letter invoice but failed to do so in a timely manner, the VAT exemption policy may be applied first, and the corresponding red-letter invoice shall be issued within one month after the expiration of the relevant VAT exemption policy.

 

If a taxpayer has declared the sales amount and sales quantity subject to the tax exemption policy as the taxable sales amount and sales quantity for VAT purposes, he can choose to correct the current declaration or adjust it in the next declaration. The VAT tax paid that should be exempted can be refunded or used to offset the VAT tax payable by the taxpayer in the future.

 

6. One-time deduction of equipment purchased by key epidemic prevention and control material production enterprises for capacity expansion is allowed before enterprise income tax

 

【Subject of Enjoyment】 : Key epidemic prevention and control material production enterprises

 

[Policy Basis]

 

(1) Announcement of the Ministry of Finance and the State Taxation Administration on the Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 8)

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content] : From January 1, 2020, the relevant equipment newly purchased by key epidemic prevention and control material production enterprises for expanding production capacity shall be allowed to be included in the current cost and expense for one-time deduction before enterprise income tax.

 

   The list of key epidemic prevention and control material production enterprises shall be determined by the provincial and provincial-level development and reform departments, and the industrial and information technology departments.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

Key epidemic prevention and control material production enterprises that apply the one-time pre-tax deduction policy for enterprise income tax shall follow the provisions of the State Administration of Taxation Announcement on Issues Concerning the Implementation of Enterprise Income Tax Policies Related to the Deduction of Equipment and Utensils (2018 No. 46) in terms of preferential policy management. When filing tax returns, enterprises shall fill in the relevant information in the "One-time Deduction of Fixed Assets" line of the enterprise income tax return.

 

7. Exemption of tariffs on materials imported by health authorities directly for epidemic prevention and control

 

【Subject of Enjoyment】 Materials imported by health authorities directly for epidemic prevention and control

 

[Policy Basis] 《Announcement on the Tax Exemption Policy for Imported Materials for the Prevention and Control of Pneumonia Epidemic Infected by New Coronavirus》 (Announcement No. 6 of 2020) by the Ministry of Finance, the General Administration of Customs, and the State Administration of Taxation

 

[Preferential Content]

 

From January 1, 2020 to March 31, 2020, tariffs shall be exempted on materials imported by health authorities directly for epidemic prevention and control.

 

Tax-free imported materials may be registered and released first in accordance with or by analogy with Announcement No. 17 of the General Administration of Customs in 2020, and then relevant procedures shall be completed as required.

 

8. Cash and goods donated through public welfare social organizations or state organs such as people's governments at or above the county level and their departments to respond to the epidemic are allowed to be fully deducted before enterprise income tax or individual income tax

 

【Subject of Enjoyment】 Enterprises and individuals who donate to cope with the pneumonia epidemic of new coronavirus infection through public welfare social organizations or state organs such as people's governments at or above the county level and their departments

 

[Policy Basis]

 

(1)《Announcement on the Tax Policy of Donations Related to Supporting the Prevention and Control of Pneumonia Infected by New Coronavirus》 (Announcement No. 9 of 2020) by the Ministry of Finance and the State Administration of Taxation

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content]

 

From January 1, 2020, enterprises and individuals who donate cash and goods through public welfare social organizations or state organs such as people's governments at or above the county level and their departments for the purpose of responding to the pneumonia epidemic of new coronavirus infection shall be allowed to be fully deducted when calculating the taxable income of enterprise income tax or individual income tax.

 

Donations accepted by state organs and public welfare social organizations shall be used specifically for responding to the pneumonia epidemic of new coronavirus infection and shall not be used for other purposes.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

"Public welfare social organization" refers to a social organization that has obtained the qualification for pre-tax deduction of public welfare donations in accordance with the law. Enterprises that enjoy the prescribed full pre-tax deduction policy shall adopt the method of "self-judgment, declaration and enjoyment, and retention of relevant materials for future reference", and fill in the full deduction of donations in the corresponding line of the enterprise income tax return. Individuals who enjoy the prescribed full pre-tax deduction policy shall follow the relevant provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on Individual Income Tax Policies for Public Welfare and Charitable Donations (2019 No. 99).

 

9. Donations of epidemic prevention and control items directly to hospitals undertaking epidemic prevention and control tasks are allowed to be fully deducted before enterprise income tax or individual income tax

 

【Subject of Enjoyment】 Enterprises and individuals who directly donate items to hospitals undertaking epidemic prevention and control tasks for the pneumonia epidemic caused by the novel coronavirus infection

 

[Policy Basis]

(1)《Announcement on the Tax Policy of Donations Related to Supporting the Prevention and Control of Pneumonia Infected by New Coronavirus》 (Announcement No. 9 of 2020) by the Ministry of Finance and the State Administration of Taxation

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content] From January 1, 2020, enterprises and individuals who directly donate items to hospitals undertaking epidemic prevention and control tasks for the pneumonia epidemic caused by the novel coronavirus infection are allowed to deduct the full amount when calculating the taxable income of enterprise income tax or individual income tax.

 

Donors shall handle pre-tax deduction matters based on the donation receipt issued by the hospital undertaking epidemic prevention and control tasks.

 

Donations accepted by hospitals undertaking epidemic prevention and control tasks shall be specifically used for the pneumonia epidemic caused by the novel coronavirus infection and shall not be used for other purposes.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

Enterprises that enjoy the stipulated full pre-tax deduction policy shall adopt the method of "self-judgment, declaration and enjoyment, and retention of relevant materials for future reference", and fill in the full amount of donation deduction in the corresponding line of the enterprise income tax return. Individuals who enjoy the stipulated full pre-tax deduction policy shall implement it in accordance with the relevant provisions of the Announcement of the Ministry of Finance and the State Administration of Taxation on Individual Income Tax Policies for Donations to Public Welfare and Charitable Undertakings (2019 No. 99); when handling individual income tax pre-tax deductions and filling in the Individual Income Tax Public Welfare and Charitable Undertakings Donation Deduction Details Table, they shall indicate "direct donation" in the remarks column.

 

Enterprises and individuals shall retain the donation receipt issued by the hospital undertaking epidemic prevention and control tasks as a basis for pre-tax deduction for future reference.

 

10. Exemption of value-added tax, consumption tax, urban maintenance and construction tax, education surcharge, and local education surcharge for gratuitous donations of goods for epidemic prevention

 

【Subject of Enjoyment】 Units and individual businesses that gratuitously donate goods for epidemic prevention

 

[Policy Basis]

 

(1)《Announcement on the Tax Policy of Donations Related to Supporting the Prevention and Control of Pneumonia Infected by New Coronavirus》 (Announcement No. 9 of 2020) by the Ministry of Finance and the State Administration of Taxation

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content] From January 1, 2020, units and individual businesses that donate self-produced, commissioned-processed, or purchased goods free of charge through public welfare social organizations and state organs such as people's governments at or above the county level and their departments, or directly to hospitals undertaking epidemic prevention and control tasks, for the pneumonia epidemic caused by the novel coronavirus infection, are exempt from value-added tax, consumption tax, urban maintenance and construction tax, education surcharge, and local education surcharge.

 

The cut-off date for the above preferential policies will be announced separately depending on the epidemic situation.

 

Taxpayers who enjoy the preferential treatment of exemption from value-added tax and consumption tax according to regulations may independently declare tax exemption without going through relevant tax exemption filing procedures, but they shall retain relevant supporting materials for future reference. When handling value-added tax returns, they shall fill in the corresponding columns of the value-added tax return and the Value-Added Tax Reduction and Exemption Declaration Details Table; when handling consumption tax returns, they shall fill in the consumption tax return and the Details Table of Tax Reduction (Exemption) Amount for the Current Period.

 

Taxpayers who are subject to VAT exemption policies according to regulations shall not issue VAT special invoices; if VAT special invoices have been issued, corresponding red-letter invoices shall be issued or the original invoices shall be cancelled, and then the VAT exemption policy shall be applied and ordinary invoices shall be issued. If a taxpayer has issued a special VAT invoice during the epidemic prevention and control period, and should have issued a corresponding red-letter invoice but failed to do so in a timely manner, the VAT exemption policy may be applied first, and the corresponding red-letter invoice shall be issued within one month after the expiration of the relevant VAT exemption policy.

 

If a taxpayer has already declared value-added tax and consumption tax for sales and sales quantities that are subject to tax-exempt policies according to taxable sales and sales quantities, they may choose to correct the current declaration or adjust it in the next declaration. The value-added tax and consumption tax that have been levied and should be exempted may be refunded or used to offset the value-added tax and consumption tax payable by the taxpayer in the future.

 

11. Expand the scope of tax-free imports for donations

 

【Subject of Enjoyment】 Imported materials donated for epidemic prevention and control

 

[Policy Basis]

 

(1) Interim Measures for the Exemption of Import Taxes on Donated Materials for Charitable Purposes (Announcement No. 102 of the Ministry of Finance, General Administration of Customs, and State Administration of Taxation, 2015)

 

(2) Announcement of the Ministry of Finance, General Administration of Customs, and State Administration of Taxation on Tax Exemption Policies for Imported Materials for the Prevention and Control of Pneumonia Epidemic Caused by Novel Coronavirus Infection (2020 No. 6)

 

 [Preferential Content] From January 1, 2020 to March 31, 2020, the scope of tax-free imports stipulated in the Interim Measures for the Exemption of Import Taxes on Donated Materials for Charitable Purposes will be moderately expanded, and import duties and import-related value-added tax and consumption tax will be exempted for imported materials donated for epidemic prevention and control.

 

(1) Imported materials include reagents, disinfectants, protective equipment, ambulances, epidemic prevention vehicles, disinfection vehicles, and emergency command vehicles.

 

(2) The scope of tax exemption includes direct donations from overseas or customs special supervision areas by relevant domestic government departments, enterprises, public institutions, social organizations, individuals, and foreign citizens coming to or residing in China; donations from domestic processing trade enterprises. Donated materials should be directly used for epidemic prevention and control and comply with the aforementioned item (1) or the provisions of the Interim Measures for the Exemption of Import Taxes on Donated Materials for Charitable Purposes.

 

(3) The recipients include provincial civil affairs departments or their designated units. The provincial civil affairs departments shall inform the directly affiliated customs and provincial tax departments in the location of the list of designated units.

 

For tax-free imported materials under Announcement No. 6 of the Ministry of Finance, General Administration of Customs, and State Administration of Taxation, 2020, the tax that has been levied and should be exempted shall be refunded. Among them, for those that have been taxed and imported but have not yet declared the input tax amount deduction for value-added tax, they can apply to the customs for refunding the levied import duties and import-related value-added tax and consumption tax by presenting the Proof of Non-Deduction of Value-Added Tax Input Tax Amount for Imported Materials for the Prevention and Control of Pneumonia Epidemic Caused by Novel Coronavirus Infection issued by the competent tax authority; for those that have declared the input tax amount deduction for value-added tax, they can only apply to the customs for refunding the levied import duties and import-related consumption tax. The relevant importing units shall go through the tax refund procedures with the customs before September 30, 2020.

 

Tax-free imported materials may be registered and released first in accordance with or by analogy with Announcement No. 17 of the General Administration of Customs in 2020, and then relevant procedures shall be completed as required.

 

12. The maximum carry-forward period for losses incurred in 2020 by enterprises in difficult industries that are greatly affected by the epidemic is extended to 8 years

 

【Subject of Enjoyment】 Enterprises in difficult industries that are greatly affected by the epidemic

 

[Policy Basis]

 

(1) Announcement of the Ministry of Finance and the State Taxation Administration on the Tax Policies in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 8)

 

(2) Announcement of the State Taxation Administration on the Tax Collection and Administration Matters in Support of the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection (2020 No. 4)

 

[Preferential Content] From January 1, 2020, the maximum carry-forward period for losses incurred in 2020 by enterprises in difficult industries that are greatly affected by the epidemic is extended from 5 years to 8 years.

 

Difficult industries include four categories: transportation, catering, accommodation, and tourism (referring to the two categories of travel agencies and related services, and scenic spot management). The specific judgment criteria are implemented in accordance with the current National Economic Industry Classification. The main business income of enterprises in difficult industries in 2020 must account for more than 50% of the total income (excluding non-taxable income and investment income). 

 

Enterprises in difficult industries that are greatly affected by the epidemic and apply the policy of extending the loss carry-forward period in accordance with regulations shall submit a Declaration for Applying the Policy of Extending the Loss Carry-Forward Period through the electronic tax bureau during the 2020 annual enterprise income tax settlement.

 

III. Introduction to the national tax and fee preferential policies to support small and micro enterprises in fighting the epidemic

 

(1) Small and micro enterprise tax increase reduction and exemption preferential treatment

 

On February 25, 2020, Premier Li Keqiang of the State Council chaired an executive meeting of the State Council to deploy greater support for individual businesses to cope with the impact of the epidemic, and proposed to reduce and exempt value-added tax for small-scale taxpayers. The executive meeting of the State Council required that from March 1 to the end of May, value-added tax for small-scale taxpayers in Hubei Province be exempted, and the tax rate in other regions be reduced from 3% to 1%.

 

Interpretation of Tax Law Application:

 

The term 'small-scale taxpayer' is relative to 'general taxpayer,' referring to enterprises and individual businesses with annual taxable VAT sales of 5 million yuan or less.

 

The calculation of VAT for small-scale taxpayers also differs from that of general taxpayers. The current VAT rates for general taxpayers are 13%, 9%, and 6%, while small-scale taxpayers adopt a simplified method of assessment based on a 'collection rate.' Except for individual industries such as property sales, the 'collection rate' for small-scale taxpayers is uniformly 3%.

 

According to regulations, general taxpayers who meet certain criteria can choose to register as small-scale taxpayers to enjoy relevant preferential policies. According to relevant regulations, small-scale taxpayers are exempt from VAT if their total monthly sales of VAT taxable sales do not exceed 100,000 yuan; or if the quarterly sales do not exceed 300,000 yuan for those with a tax period of one quarter.

 

(II) Reduction and Exemption of Endowment, Unemployment, and Work Injury Insurance for Micro and Small Enterprises

 

On February 18, 2020, the State Council executive meeting decided to temporarily reduce or exempt enterprise endowment, unemployment, and work injury insurance contributions to alleviate the impact of the epidemic on enterprises, especially small and micro enterprises. The meeting decided that all provinces except Hubei could exempt small and micro enterprises from the above three expenses from February to June, and large enterprises could be levied at half the rate from February to April; Hubei Province could implement exemptions for all types of insured enterprises from February to June.

 

(III) Other Tax and Fee Reductions and Exemptions

 

The state encourages local governments to support lessors in reducing or exempting property rents for individual businesses by reducing or exempting the burden of urban land use tax, thereby reducing the burden on small and micro enterprises. In addition, attention should be paid to other financial and tax preferential policies successively introduced by the state for the majority of small and medium-sized enterprises and individual businesses, so as to minimize the operating burden, help various market entities tide over the difficulties of the epidemic together, and boost market confidence.

 

IV. Tax-Benefiting and Service Measures for Promoting Resumption of Work and Ensuring Production Introduced by the Guangxi Zhuang Autonomous Region

 

The Guangxi Zhuang Autonomous Region Taxation Bureau has refined and sorted out various tax preferential policies for tax reduction and fee reduction in response to epidemic prevention and control, and requires that 'five implementations' and 'five good services' be achieved:

 

—'Five Implementations' of Tax Preferences. Implement the national tax support policies to address the novel coronavirus pneumonia epidemic, including allowing enterprises producing key epidemic prevention and control materials to deduct equipment purchased for capacity expansion on a one-time basis before tax, fully refunding the incremental VAT credit during the period, and exempting VAT on transportation of key epidemic prevention and control materials and provision of public transportation, living services, and postal express income. Implement tax policies to support various medical services, production of protective equipment or medicines, and research and development, and support pre-tax deduction policies for charitable donations of income tax. Implement the policy of exempting VAT on the circulation of vegetables and fresh meat and egg products to fully guarantee the supply of daily necessities such as 'vegetable basket' products. Implement the pre-tax deduction policy for asset losses of various production enterprises, and clarify that various asset losses incurred due to the impact of the epidemic shall be allowed to be deducted before enterprise income tax as stipulated. Implement various national tax exemption policies, and government subsidies obtained for epidemic prevention and control that meet the conditions for non-taxable income shall be treated as non-taxable income.

 

—Optimize Services and 'Five Good Services'. In terms of optimizing services, achieve 'five good services':

 

1. Priority for Tax Rebates: Give priority to the production and sales of epidemic prevention and control materials and related enterprises affected by the epidemic in the implementation of VAT credit refund policies; accelerate the efficiency of export tax rebate approval, compress the time limit for tax rebates, and alleviate the pressure on capital occupation.

 

2. Accelerated Processing of Difficulties Reduction and Exemption: For enterprises that have suffered major losses due to the impact of the epidemic, and whose normal production and operation activities have been significantly affected, and who have difficulties in paying property tax and urban land use tax, the tax reduction or exemption shall be approved by the tax authority with the authority to approve after verification.

 

3. Extended Declaration and Tax Payment: The statutory declaration and tax payment period for taxpayers and withholding agents who declare on a monthly basis in February 2020 will be extended to February 24 in accordance with the requirements of the State Administration of Taxation; if there are still difficulties in declaration and tax payment due to the impact of the epidemic, an application for further extension may be filed in accordance with the law.

 

4. Invoice Collection and Use as Needed: During the epidemic prevention and control period, the tax department will issue VAT invoices to taxpayers who produce epidemic prevention and control materials as needed.

 

5. Personalized Needs Appointment: In accordance with the principle of 'non-essential, no visit to the hall', actively guide the majority of taxpayers and payers to handle relevant tax matters through online channels such as the Guangxi Electronic Taxation Bureau, Guangxi Taxation 12366 WeChat Official Account, 'Guangxi Taxation' APP, 'Guangxi Government Affairs' APP, and 'Natural Person Electronic Taxation Bureau'. Taxpayers and payers with personalized needs who do need to handle matters on-site shall take appointment handling and other staggered peak diversion measures to avoid gathering of personnel in tax payment service places.

 

V. Several Legal Suggestions from Tax Lawyers on Taxpayers' Anti-epidemic Efforts

  

 1. Actively carry out production self-rescue and anti-epidemic production protection actions. Make good use of existing tax policies, take the initiative to do tax planning, and alleviate the temporary difficulties in the operation of enterprises. Under the premise of making good and full use of various financial and tax preferential policies related to supporting the fight against the COVID-19 epidemic issued by the state, combined with the actual needs of taxpayers, make good use of financial and tax preferential policies such as accelerated depreciation, additional deduction of R&D investment, various national encouraged investment preferences, and the central bank's interest rate cuts and RRR cuts to effectively reduce the increase in corporate operating costs and the cash flow brought about by tax incentives, so as to maximize the mitigation of the impact of the epidemic and improve the pressure of anti-risk, growth protection, and efficiency increase. Overcoming difficulties is spring.

 

2. Actively report to relevant financial and tax management departments various realistic and potential financial and tax difficulties and problems encountered in the production and operation process. Conscientiously study laws and regulations such as the 'Tax Collection and Administration Law', 'Tax Administrative Reconsideration Rules', 'Administrative Procedure Law', 'Enterprise Income Tax Law', and 'Invoice Management Measures', and fully safeguard their legitimate rights and interests through legal means. When necessary, actively seek help from professional lawyers, so as to better promote the legalization level of risk prevention and rights protection in operation.

 

3. Operate with integrity, pay taxes with integrity, and improve business reputation and tax credit. For all types of enterprises, it is inevitable to suffer losses when encountering major disasters and epidemics. Similar systemic operating risks are a force majeure. While stopping losses and self-rescue, they should always adhere to operating with integrity and paying taxes with integrity as the foundation for the survival of enterprises. Integrity is the golden key for enterprises to overcome difficulties and continue to develop. They must not be included in various credit blacklists due to violations of laws and regulations and dishonesty, which will lead to significant losses of intangible assets such as their own reputation and market recognition.