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Insights e-Newsletter

China Covid-19 Outbreak Snippets • March 31, 2020

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With the Covid-19 slowing down the economy and global trade, it can be easy to miss the many policies which the Chinese Government has enacted to business big and small to stay operational. LehmanBrown here shares some Snippets of important policies which business should be aware of and benefit from.

Hubei Province VAT

During the period from March 1, 2020, to May 31, 2020, for the taxable sales income of small-scale VAT taxpayers in Hubei Province to which a levy rate of 3% is applicable is exempted from VAT, and the pre-payment VAT on pre-payment VAT items subject to a pre-levy rate of 3% is suspended. Except for those in Hubei Province, small-scale VAT payers in other provinces, autonomous regions and centrally-administered municipalities may pay VAT at the reduced levy rate of 1% for their taxable sales revenue subject to a levy rate of 3%; they may also prepay VAT at the reduced pre-levy rate of 1% for their pre-payment VAT items subject to a pre-levy rate of 3%.

Recommendations

If you are a small-scale VAT taxpayer and are thinking about any possible ways to reduce the cost to improve competitiveness at this tough time, try to take advantage of this preferential tax treatment.

The Periodical Deduction and Exemption of Enterprise Social Insurance Premium

Released on February 25

The Government has announced a series of measures temporarily exempting or lowering social insurance payments of enterprises through waiving, reducing and deferring social insurance payments. From February 2020, micro-enterprises and SMEs in all provinces may be exempted from social insurance payments for pension, unemployment and on-job injury for no more than five months until June 2020. In Hubei Province, the exemption scope is for all enterprises participating in social welfare contributions. For large enterprises and other companies participating in other provinces, the three types of social insurance payments may be halved, with the period of reduction not exceeding three months. Enterprises in severe difficulties due to the epidemic may apply for deferring the payment for a period not exceeding six months, with no late fees for this period.

Recommendations

Social welfare cost in China is very high as a percentage of salaries. This measure will relieve the enterprises’ costs, especially for the micro-enterprises and SMEs, and ease their financial pressures from the epidemic, and help them retain employment.

Employer and Employee can Conclude a Labour Contract in Electronic Form by Consensus

Released on March 4

The General Office of the Ministry of Human Resources and Social Security issued the “Letter of the General Office of the Ministry of Human Resources and Social Security on Issues Concerning the Establishment of Digital Labour Contracts”. The document clarified that the employer and employee could reach a consensus through consultation and create a written labour contract in digital form. A Digital labour contract’s text, data and reliable digital signature shall be used, and regarded the same as a written labour contract following the Digital Signature Law, and related laws and regulations. The employer shall ensure that the generation, transmission, and storage of the digital labour contract meet the requirements of the Digital Signature Law and other laws and regulations, and ensure that it is complete, accurate and not tampered with. An Digital labour contract that complies with the provisions of the Labour Contract Law and the above requirements has legal effect as soon as it is made. The employer and the employee shall fully perform their respective obligations following the provisions of the digital labour contract.

Recommendations

The digitalisation of documents is the current general trend, and the application of digital signatures in the field of labour relations also has positive significance for future business developments in China. By allowing the digitalisation of documents such as Labour contracts businesses can in future comply with policies in a much simpler, faster, and convenient way. Furthermore, such policies meet the government’s requirements for paperless working and helping the global effort for environmental protection.

Find Out More

If you would like to find out how your business can benefit from these policies and potential others not motioned here please send your enquiries to enquiries@lehmanbrown.com.

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