(Yicai Global) May 8 -- China’s tax and finance authorities have extended value-added tax exemptions for small- and medium-sized enterprises in Hubei province, the epicenter of the Covid-19 pandemic, until the end of this year rather than the end of this month.
Taxpaying companies whose annual sales do not exceed CNY5 million (USD707,100) will not need to pay VAT, the Ministry of Finance and State Taxation Administration said in a joint notice yesterday. Usually, the companies would have to pay 3 percent of turnover regardless of whether they were profitable or not.
The tax administration waived the tax for small-scale taxpayers in Hubei from March until this month in order to help the region recover from the coronavirus that is now sweeping the planet. All companies in the province are exempt from paying pension, unemployment and industrial injury insurance from February through next month, it said in March, though it remains to be seen whether it will extend these social security exemptions.
China introduced a series of tax measures to support smaller companies last year, nulling the requirement for VAT from companies whose sales reached less than CNY100,000 (USD14,150) a month. So the new exemption extension will only really affect companies generating annual revenue from CNY1.2 million to CNY5 million.
Outside of tax breaks, authorities also issued a document yesterday that aimed to bolster support for workers from and in Hubei, including granting employment and entrepreneurial subsidies to companies and providing free public employment services for the unemployed and recovered patients of Covid-19.
The Export-Import Bank of China also issued the first bond aimed at bringing Hubei back to life in the inter-bank bond market. The one-year bill issuance totaled CNY5 billion and the bonds carry a coupon of just over 1.01 percent. All funds raised will go toward helping local companies return to work.
Editors: Dou Shicong, James Boynton