Preferential tax policies for the production of materials and delivery of services
On February 6, 2020, China’s STA also released preferential tax policies for enterprises and individual taxpayers providing materials and services during the COVID-19 period:
Enterprises producing key materials can get a full refund of tax credits for the incremental VAT. On the other hand, they can also get a one-off deduction before corporate income tax (CIT) for newly-purchased equipment intended for expanding production capacity.
Taxpayers providing the following services will be exempt from paying VAT for their income:
- Transportation of essential materials
- Public transport services
- Life services
- Express deliveries for necessities
Imported materials for direct use in COVID-19 prevention and control are also duty-free. The preferential tax duration starts from January 1, 2020, until the end of the pandemic control and prevention.
Policy support for donations
According to Announcement No. 9 regarding public welfare donations, donors of goods and items related to COVID-19 will receive preferential treatment on their income taxes. See the table below for more information about the types of donations:
Tax policies on the resumption of work and production
Enterprises that experienced difficulties due to COVID-19 will have their losses carried-over for eight years. These enterprises fall into the following industries: transportation, catering, accommodation, and tourism. Furthermore, small-scale taxpayers will also receive preferential treatment from March 1, 2020, to May 1, 2020. See the following details of VAT reduction or exemption:
Extension of tax declaration
To ease the burden of catching up with tax deadlines, the tax authorities further extended the tax filing deadline from February 28 to March 23. However, STA also announced that the declaration period may be extended for the areas that are still in the first level of response to COVID-19 prevention and control.
The tax declaration period for service charges involving withholding tax collection in 2019 is extended from March 30 to May 30, 2020.
Taxpayers who are reporting monthly or quarterly may declare taxes until April 24, 2020. Those who will still have difficulty fulfilling this obligation may apply for further extension to respective tax authorities.
Meanwhile, Hubei province may extend tax declaration following the circumstances.
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