Preferential Tax Treatment for Commodity Reserves in Shanghai

According to the Announcement of the State Administration of Taxation of the Ministry of Finance No. 8 of 2022 "The Continuation of the Implementation of Tax Preferential Policies for Some National Commodity Reserves", Shanghai will implement preferential tax policies for enterprises operating on commodity reserve stockpiling from January 1st, 2022 to December 31st, 2023.

In order to support the National Commodity Reserve, reserve management companies and their directly affiliated warehouses that are entrusted by relevant departments of the Shanghai Municipal Government at both levels to undertake the stockpiling of grain (including soybeans), edible oil, cotton, sugar and meat are exempted from Stamp Duty, Real Estate Tax and Urban Land Use Tax.

Relevant enterprises should go through the tax exemption declaration procedures with the competent tax authority, as well as prepare the relevant following information for reference:

1) Written entrustment agreements signed with relevant Departments of Municipal Governments at Municipal and district levels to undertake reserve tasks, or relevant reserve documents, or acquisition and storage agreements signed between management companies and subsidiaries;

2) Obtaining management documents for financial reserve refunds and subsidies, or relevant agreements, or related receipt;

3) Relevant materials such as the ownership certificate of the land for self-use and the original value of the real estate undertaking the reserve activities;

4) Undertake relevant materials such as the business situation of reserve commodities and the construction plan of the reserve bank.

The aforementioned taxes, Stamp Duty, Real Estate Tax and Urban Land Use Tax, which have already been levied on such matters and paid after January 1st, 2022 will be deducted or refunded from the corresponding taxes payable by the enterprise.

This tax incentive policy is one of the many policies aimed at reducing the tax burden on manufacturing and small and micro enterprises, lowering their operating costs and supporting the development of the real economy. Additionally, the authorities published this policy in order to thwart the inflation in the food industry in 2022. 

At PHC Advisory, our team is constantly monitoring the most recent incentives and subsidies accessible to businesses in China. Feel free to reach out to us at to find out more about preferential policies in China that your company could benefit from.

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