China Covid-19 Outbreak Snippets • April 20th, 2020
Last week saw the first slowdown in China’s growth; however, cities like Shanghai have released measures to support and attract Foreign Investments, while enormous steps have been taken to increase the exchange of financial information globally. There are plenty of beneficial policies for businesses to take advantage, and LehmanBrown will continue to share them to assist businesses through these hard times.
Shanghai One-off Absorptive Employment Subsidy
The one-off absorptive employment subsidy is given to those enterprises with emergency taking of production capacity and those enterprises permitted to produce after approval by related Government authorities during the 2020 Spring Festival (as of 9 February 2020).
The subsidy amounts to 1,500 RMB / person upon the actual employees returning to work during the 2020 Spring Festival. Each enterprise could apply for the subsidy only once with the upper limit of 5 million RMB.
Stable Employment Subsidy for Hard Hit Enterprises in Shanghai
The stable employment subsidy is given to those Shanghai enterprises of four kinds of industries which have been impacted by Covid-19, including accommodation and catering; cultural, sports and entertainment; transportation; and tourism; which were established before 1 January 2020 and paid social securities in accordance with related regulations.
The subsidy amounts to 800 RMB per person upon the actual employees paying the social securities of last month when the enterprise applied. Each enterprise could apply for the subsidy only once with the upper limit of 5 million RMB. This notice is valid within three months after the end of the epidemic Coronavirus period.
AEOI Showing Promise for Global Tax Transparency
The third annual Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI) implementation report was recently published, which summarised the progress of increasing transparency and exchange of information for tax purposes.
China together with other G20 members are part of the global effort to create incorporating legal and technical requirements for the standardised and automatic exchange of financial information including assets and accounts held by banks, insurers and investment entities owned by individual and entities resident offshore.
The exchange is important since China is part of over 110 countries that have signed up to Common Reporting System (CRS), where financial information is remitted to tax bureaus in their respective jurisdictions, which in turn is part of a global exchange of information based upon a common reporting framework and tax identification numbers linked to individuals. Phase I was only high net worth individuals, but various jurisdictions are progressing to medium wealth individuals. The aim of CRS under OECD is to curtail global tax avoidance.
According to the report:
- There were around 6100 exchanges in 2019, which increased by 36%;
- There were 98% of jurisdictions which now have the domestic legal framework in place;
- There were 525 recommendations made to address gaps in legal frameworks with 78 already addressed;
- There were 98% of jurisdictions which now have the international legal framework in place.
Thus far China has only exchanged with 64 partners data relating from 2018 to 2019, has activated CRS Multilateral Competent Authority Agreements (MCAA) from China to 69 other courtiers and has 97 CRS MCAAs activated from other countries to China. More regulations are being planned to implement Taxpayer Identification Numbers (TIN) to register both Chinese and foreign workers to facilitate tracking of individual’s funds using the current banking registrations details.
The aim of CRS is to reduce tax evasion. Those that come are likely to be in the information transfer net should review their overall tax positions to ensure that they have optimised this from a tax efficiency perspective, to reduce taxes using benefits and opportunities provided by various jurisdictions but whilst keeping within the confines of regulations.
Find Out More
In case you missed the last week’s snippets you can find them by clicking the link here.
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 email@example.com.