Affected by the COVID-19 epidemic, Shanghai government has enacted the following favorable policies to support business through difficult time.
Heidy Han | Partner
W&H Law Firm Shanghai Office
Member of Intl. Bar Association
1. Policies regarding social insurances
Shanghai Human Resources and Social Security Bureau released on March 14, 2020 that pension insurance, unemployment insurance and work-related injury insurance (Three Social Insurances) contributed by the companies will be reduced or exempted phasedly. Three Social Insurances contributed by the medium-small scaled companies will be exempted from February to June 2020. Three Social Insurance contributed by the large-scaled companies will be reduced by half from February to April 2020. No application for the abovesaid favorable policy by the companies is necessary, because Shanghai Human Resources and Social Security Bureau and other relevant governmental sectors will jointly determine the type of the companies (large, medium or small scaled companies) based on their internal big data and thereafter such policy will be applied automatically. However, the companies are allowed to raise objection on the governments decision.
2. Polices regarding medical insurance
Shanghai Healthcare Security Bureau released on March 12, 2020 that medical insurance (including maternity insurance) contributed by the companies, no matter if they are large, medium or small scaled companies, will be reduced by half from February to June 2020, namely at the rate of 5.25%. Moreover, from July to December, 2020, medical insurance (including maternity insurance) contributed by the companies will be reduced by 0.5%, namely at the rate of 10%. Like the Three Social Insurances, no application for this favorable policy by the companies is necessary, because such policy will be handled together with the policy of Three Social Insurances jointly by Shanghai Healthcare Security Bureau and Shanghai Human Resources and Social Security Bureau. We suggest that HR may check with these two government departments in this regard.
3. Policies regarding housing fund
Shanghai Housing Provident Fund Management Center released on March 3, 2020 that the companies, no matter if they are large, medium or small scaled companies, can apply for holdover of housing provident fund contributed by the companies during the period from February to June 2020, provided that the proposed application is approved by the employee representatives or the labor union of the companies after discussion. Such application can be submitted through the official website of Shanghai Housing Provident Fund Management Center with its link at www.shgjj.com, and the time limit for handling such application is within 5 working days. If your company wants to submit this application, we suggest that a written consent regarding this matter had better be signed by all the employees to avoid any potential legal risk.
4. Policies regarding income taxes
The Ministry of Finance released on February 6, 2020 that the value of cash and/or articles donated by the companies or their employee(s) directly to the hospitals responsible for prevention and control of the COVID-19 epidemic or through nonprofit social organizations and/or governmental sectors and used for the COVID-19 epidemic, can be totally deducted from their taxable incomes. In the situation where a donation is directly made to hospitals, a receipt regarding acceptance of the donation is needed to get a tax deduction. If your company or employees have been doing charities, please double check to see if you can be entitled to such tax deduction.
5. Polices regarding
VAT and employment subsidy
Basically, other favorable polices regarding VAT and employment subsidy are applicable to the companies which run in the red, or engage in transportation or necessities of life, or fall into one of the following industries seriously affected by the COVID-19 epidemic - accommodation and catering, entertainment, transportation and tourism. The standard of employment subsidy is RMB 800 per person and each company can only apply for such subsidy once with the capped amount of RMB 5 million.
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