Chongqing - The General Office of the Chongqing Municipal People's Government issued Policies and Measures Supporting Work Resumption, Production and Operation of Enterprises in Chongqing, according to the municipal press conference on epidemic prevention and control on March 3, 2020. The issuance involves three aspects- fiance support, tax remission, and cost of production and operation. And here is the official interpretation and all the 40 policies and measures as the end of the article.
A staff member at the Loncin Motor located in Chongqing High-Tech Zone is testing motorcycles on March 3, 2020. (Photo by Wang Quanchao)
Official interpretation
At the press conference on COVID-19 prevention and control in Chongqing on March 3, serveral government official interpreted the 40 measures respectively.
Mi Benjia, Deputy Director of Chongqing Municipal Development and Reform Commission
A total of 6,475 enterprises above designated size in Chongqing have resumed business, with the rate of operation reaching 99.4%, and 549 municipal-level major projects under construction have resumed construction, with a work resumption rate of 98.6%, as of March 2. On the whole, the city has achieved the goal of overall work resumption by late February and early March.
Those policies and measures aim to tide enterprises over difficulties in production and operation and speed up the production resumption of enterprises and the construction resumption of municipal-level major projects.
The policies and measures are divided into three aspects as follows:
First, there are 10 policies on increasing financial support, which involve the renewal of loans and insurance, emergency working capital for loan transfer, credit upgrade through assurance, loan rate reduction, loans with discounted interest, new loans for agriculture-related and micro and small businesses, targeted credit granting loans, special reloaning support for epidemic prevention and control, rewards and subsidies for the financing guarantee fee, support for foreign trade enterprises and other aspects. It is expected to save about RMB 1.6 billion in financing costs for enterprises.
Second, 15 policies are about putting more effort into financial and tax remission, covering the reduction of the rate of value-added tax (VAT), tax adjustment of individual businesses, tax relief, extension of the carryforward period of losses, tax deferral, a fund pool for epidemic prevention materials, training subsidies, agricultural production and marketing subsidies, logistics cost reduction and efficiency improvement, freight resumption, highway transportation resumption, service outsourcing subsidies, etc. It is estimated that corporate taxes will be reduced by nearly RMB one billion and more than 20,000 enterprise employees will have the opportunity to attend training.
Third, 15 policies were introduced to reduce the cost of production and operation, involving relief and deferral of social insurance charges, provident fund relief and deferral, subsidies for keeping enterprise workers in their jobs, rent relief, reduction of energy and water costs for businesses, relief and deferral of security deposit for salary of migrant workers, project capital supervision, infrastructure supporting fees deferral, deferral of fees for relocated air defense basement construction, etc. It is preliminarily estimated that social insurance charges will be reduced by about RMB 13.3 billion, the energy and water costs of enterprises will be cut by about RMB 1.45 billion, and about 700,000 enterprise workers will be kept in their jobs.
Highlights of the 40 policies and measures
They have four features as follows:
First, they have prominent key points. The policies and measures start from three aspects of financial support, tax relief, and cost reduction.
Second, they are specific. In response to the concerns of enterprises, Chongqing introduced policies that are most direct, urgent and rewarding to enterprises, thus enhancing their confidence and stabilizing the market expectation. For example, through such measures as offering enterprises the working capital, special reloaning support and targeted credit granting loans, the city has helped enterprises to function properly and made them have start-up capital to resume production. It has also allowed enterprises to resume normal production and operation through such measures as loan extension, interest deferral, and interest rate and tax rate reduction.
Third, those polices and measures have benefited a large number of enterprises. They have covered key enterprises for epidemic prevention and control and micro-, small, medium and large-sized enterprises, and expanded the policy benefit to a great number of individual businesses.
Fourth, those polices and measures have played a pivotal role. For instance, the policy for renewal of loans and insurance has realized the corporate loan principal extension of about RMB 100 billion, saving about RMB 800 million in financing costs.
Peng Yong, Chief Accountant of Chongqing Finance Bureau
As of March 2, 6,475 enterprises above designated size in Chongqing have resumed business, with the rate of operation reaching 99.4%, and 549 major municipal projects under construction have resumed construction, with a work resumption rate of 98.6%. On the whole, the city has achieved the goal of overall work resumption by late February and early March.
First, Chongqing has provided financial guarantee for epidemic prevention and control.
As of March 3, Chongqing had provided RMB 2.1 billion in financial support for epidemic prevention and control. In addition, it has intensively rolled out a package of policies, such as tax reduction and fee reduction, to bail out enterprises and support resumption of work and production.
Second, Chongqing has advanced the resumption of work and production and operation of enterprises.
In terms of the support for enterprises, the Central Government and Chongqing have introduced varieties of policies, involving all aspects of business operations. After the outbreak of the epidemic, Chongqing has studied and introduced a number of policies to minimize the impact of the epidemic on the economy and enterprises.
For example, discounted interest is available to micro-, small and medium -sized enterprises with financial difficulties from February to June, which does not exceed 50% of the benchmark interest rate. It is expected to support corporate loans of more than RMB 30 billion and save interest costs of about RMB 300 million.
For another example, the micro and small-sized enterprises are provided with rewards and subsidies for the financing guarantee fee, which is a new highlight of those policies, with the purpose of further solving the problem of difficult and expensive financing of micro and small-sized enterprises.
Aiming to ensure the epidemic prevention and control and achieve economic and social development, Chongqing will pay more attention to the integration of financial support and policies related to currency, employment, industry, and finance, in a bid to stabilize employment, finance, foreign trade, foreign investment, domestic investment and expectations.
Chongqing will support the real economy, improve the people’s livelihood, and expand government investment.
Yao Chaozhi, Deputy Director General of Chongqing Municipal Tax Service, State Taxation Administration
Among the 40 policies and measures for supporting the resumption of production and operation of enterprises, there are eight tax policies, covering tax reduction, tax exemption, tax deferral, pre-tax deduction, and tax loss carry-forward.
Tax reduction. First, the tax rate for small-scale taxpayers shall be reduced in a phased manner. Second, the taxpayers with financial difficulties shall be exempt from house property tax and urban land use tax.
Tax exemption.There are three related policies. First, taxpayers shall be exempt from VAT on the revenue derived from the transport of key materials for epidemic prevention and control. Second, taxpayers shall be exempt from VAT on the revenue from the provision of public transportation services and living services, as well as the provision of express delivery services of residents’ necessities. These taxpayers shall also be exempt from urban maintenance and construction tax, education surcharges, and local education surcharges. The public transportation services include passenger ferry, bus passenger transportation, subway, urban metro, taxi, and long-distance transport. Third, units and individual businesses with voluntary donations shall be exempt from tax.
Pre-tax deduction. For enterprises that donate cash and materials for epidemic control through non-profit social organizations or governments at or above the county level and their departments, or directly donate anti-epidemic materials to the hospital responsible for epidemic prevention and control, the expenditures on public welfare donation shall be fully deducted in the calculation of taxable income, and shall not be subject to the limit of 12% of the total annual profit.
Tax loss carry-forward. For the enterprises with financial difficulties in the four major sectors of transportation, catering, accommodation, tourism and related services that are greatly affected by the epidemic, the maximum carry-forward period for the losses incurred in 2020 shall be extended to eight years from five years.
Tax deferral. The taxpayers who are unable to file and pay tax within the prescribed time limit due to the epidemic may apply for an extension of the tax payment in accordance with the law, but the maximum extended period shall not exceed three months.
Increase finance support
- Renewal of loans and insurance.
- Emergency working capital for loan transfer of micro-, small and medium-sized enterprises.
- Credit upgrade through assurance.
- Loan rate reduction.
- The loan with discounted interest for micro-, small and medium-sized enterprises in difficulties.
- Special reloaning for agriculture-related and small and micro-businesses.
- Targeted credit-granting loans.
- Special reloaning to key enterprises for epidemic prevention and control.
- Rewards and subsidies for the financing guarantee fees for micro and small-sized enterprises.
- Finance support for foreign trade enterprises.
Put more effort into tax remission
- Reduce the tax rate for small-scale value-added tax (VAT) payers in a phased manner.
- Adjust the tax quota of individual businesses.
- Allow small and medium-sized enterprises with financial difficulties to apply for tax relief.
- Exempt the epidemic prevention transportation industry from taxation.
- Exempt enterprises from part of the tax for their charitable donations.
- Exempt individual businesses from part of the tax for their voluntary donations.
- Extend the carry-forward period of losses.
- Defer tax paying.
- Subsidize the vocational training.
- Establish a fund pool for epidemic prevention materials.
- Subsidize the production and sale of operators of new agriculture.
- Continue reducing the cost and increasing the efficiency of port logistics.
- Support truck flights to promote international freight resumption.
- Support the operation resumption of highway transportation enterprises.
- Subsidize service outsourcing.
Lower the cost of production and operation
- Reduce or exempt premiums of pension insurance, unemployment insurance, and work-related injury insurance in a phased manner.
- Reduce the basic medical insurance premiums collected from employees in a phased manner.
- Defer the payment of social insurance charges.
- Provide enterprises with subsidies for keeping people in their jobs.
- Ease the burden of housing provident fund payment.
- Reduce or remit the house rent.
- Reduce or remit the rent of operators of new agriculture.
- Reduce the electricity cost of enterprises by stages.
- Reduce the gas cost of enterprises by stages.
- Reduce the cost of water of enterprises by stages.
- Defer, reduce or remit the margin wages of migrant workers.
- Adjust the project capital supervision policy.
- Defer, reduce or remit the urban infrastructure supporting fee.
- Defer, reduce or remit the fee for relocated air defense basement construction.
- Remit the registration fee for medical device products and drugs.
Attachment: Chongqing’s Several Policies and Measures to Support Resumption of Work, Production and Operation of Enterprises Detailed Rules and Regulations for Implementation