China government to reduce social security payments for businesses during Covid-19
By Barry Kirkwood – General Manager, JM Gemini – China
The Coronavirus (Covid-19) outbreak in China has caused major disruptions to both individuals and businesses over the past few weeks, with uncertainty set to continue.
According to Xinhua News Agency, there more than 30 million SMEs in China, contributing over 60 per cent of GDP and over 80 per cent of employment, and many of them will need support to keep operating.
In the past few weeks has reacted to this challenge and announced over 600 new policies to provide much-needed relief to businesses who have been impacted by the outbreak.
One of the key policy announcements has come from the Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Taxation Administration of the People’s Republic of China, who jointly released the Notice regarding the Reduction and Exemption of Social Insurance Contributions.
The policy covers two key areas:
1. The reduction and exemption of corporate social insurance contributions
The policy states that from February to June 2020, small and medium enterprise (SMEs) in provinces, except Hubei, will be exempt from paying contributions on the following benefits:
· Pension;
· Unemployment;
· Work injury insurances.
Larger companies will also receive temporary relief, with their contributions of these three social insurances will be reduced by 50% from February to April 2020.
2. Companies can apply to defer housing fund contributions
All businesses in China can apply for a delayed contribution to the public housing fund until the end of June 2020.
The official announcement can be found here and it is expected that more policies will be announced in the future to provide additional support to business and their employees.
Our advice is to identify which policies will be relevant to your business and current situation and to follow guidance from your local government offices to ensure your company is able to apply and benefit from these schemes.
If you would like further advice or you would like us to support your company’s payroll management, then please contact barrymk@jmgemini.com for more information and a discussion.
