In order to further support the prevention and control of the Covid-19 pandemic in China and protect and help domestic businesses with their development, on March 17th, 2021, the Ministry of Finance announced the extension of several preferential tax policies.
The implementation period of the preferential tax policies determined in the "Announcement of the Ministry of Finance and the State Administration of Taxation on Supporting Individual Industrial and Commercial Households' Resumption of Value-Added Tax Policies" will be extended until December 31st, 2021. In particular, from April 1st, 2021 to December 31st, 2021, small-scale value-added tax (VAT) taxpayers in Hubei Province shall apply VAT at a reduced rate of 1%. As for the pre-paid VAT items to which the tax rate of 3% is normally applied, the rate shall be reduced to a rate of 1%.
Furthermore, in relation to the supporting individual income tax (IIT) policies for the prevention and control of the Covid-19 pandemic and the taxation support for the film industry as well as other such industries, in which preferential tax policies have expired, the implementation period will also be extended until December 31st, 2021.
Please find the following breakdown for your reference:
1. Temporary work subsidies and bonuses obtained by medical personnel and epidemic prevention workers in accordance with the standards set by the government shall be exempt from IIT.
2. Medicine and medical supplies provided by enterprises and public institutions to individuals in order to prevent pneumonia caused by the virus are not included in wages and salary income and are exempt from IIT.
3. From January 1st, 2021, the preferential policy of reducing the construction fee by 50% for film and other industries included in the corresponding Announcement is set to continue.
From January 1st, 2021 up to the date of this announcement, taxes and fees that have been collected that should have been reduced or exempted in accordance with the provisions of this announcement can be used to deduct or refund taxes to be paid in the future.
At PHC Advisory our team is constantly monitoring the most recent developments and incentives accessible to businesses in China. Feel free to reach us at email@example.com to find out more about preferential policies in China that your company could benefit from.