In early February, the Shanghai Municipal Human Resources and Social Security Bureau (HRSSB) announced a draft of support measures for enterprises affected by the coronavirus outbreak. Other regional governments have enacted similar policy initiatives, while the People’s Bank of China has announced that it will reduce interest rates on loans. The State Taxation Administration has extended the deadline to file taxes while the Ministry of Commerce has announced that staff that contract any infectious diseases can draw from their Housing Provident Fund (HPF) to pay for medical treatment, while employers will be allowed to defer HPF contributions if they face difficulties related to the outbreak, as long as the payments are resolved afterwards. Wholesale and retail enterprises, which are among the most economically vulnerable sectors during the outbreak, will be able to delay contributions for an extended period, until they are able to fully recover. Local governments across the country have announced measures in support of Small and Medium Enterprises, providing extended deadlines for insurance contributions, tax exemptions, and various subsidies on expenditures such as rent and employee training programs.
Unemployment Insurance Premium Refunds
For enterprises that do not cut staff (or take steps to minimize redundancies) half of all unemployment insurance premiums paid during the preceding year will be refunded by the local government in Shanghai. 140,000 companies will be able to claim RMB 2.6 billion through this scheme.
Deferred Social Security Payments
Social security in China is comprised of five different insurance categories and a mandatory Housing Provident Fund. The five insurance categories are pension, medical, unemployment, work-related injury and maternity. Premiums for pension, medical, unemployment and the housing provident fund are paid by both employers and employees. Work-related injury and maternity are paid only by the employer. Social insurance is administered by regional authorities, so policies and relief measures will vary in different parts of the country.
Payments on social insurance in Shanghai can now be deferred for three months. Instead of making payments between April 1, 2020 and March 31, 2021, companies can now contribute social insurance between July 1, 2020 and June 30, 2021. Enterprises and their employees will therefore be contributing to social security based on the previous requirements, which results in a smaller contribution in most cases, lessening overhead for companies and increasing employee income. The government expects that these refunds and deferrals will reduce the social security burden on Shanghai companies by up to 10.1 billion RMB.
Social insurance payment period
All individuals and enterprises that did not register and make social insurance payments on time will be allowed to reapply once the health crisis is resolved. Late fees will not be assessed on payments made after the deadline as long as the local social insurance agency is notified. Repayments can be completed 3 months after normalcy resumes.
Enterprises that are able to coordinate employee involvement in online vocational training programs during periods of inactivity will be eligible for a 95 percent subsidy on the training program expenses.
The local government in Suzhou has announced a 50 percent refund on unemployment insurance premiums and extended the deadline by up to six months for companies facing serious difficulties. SME’s renting state-owned properties will be exempt from one month’s rent and pay half rent for up to a two month period. Eligible companies can apply for exemptions from paying property tax.
Unemployment insurance premiums will be partially refunded in Beijing, while the deadline for social insurance premiums from January and February will be extended to the end of March, or in cases where the epidemic has caused severe difficulty, until the end of July. Commercial real estate management enterprises that provide rental exemptions to Small and Medium Enterprise tenants will also be eligible for subsidies.
Should you require any assistance with making use of these SME support policies in Mainland China, please contact our China business advisory services. We can identify advantages according to your individual circumstances during this challenging period and ensure that your company has the best possible support.
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