The prevention and control of the novel coronavirus epidemic in Shanghai has achieved initial results, and enterprises are resuming work and production in an orderly manner. In order to reduce the adverse impact of the epidemic on the production and operation of enterprises and help enterprises reduce their burdens, Shanghai governments at all levels have successively issued a series of policy documents, covering tax rebates and tax cuts, fee reductions and profit concessions, rent relief, financial subsidies, financial support, and assistance to stabilize jobs. Hillhouse Law firm sorted out the tax reduction policies concerned by enterprises. In combination with the relevant policies of the State Administration of Taxation, the Action Plan for Accelerating Economic Recovery and Revitalization of Shanghai Municipality issued by the Shanghai Municipal Government, and the Operation Rules of Tax Policy for Several Policies and Measures of Shanghai Municipality to Combat the Epidemic and Promote the Development of Enterprises issued by the Shanghai Municipal Taxation Bureau, the risk points of enterprises applying relevant tax policies were analyzed and suggested. To guide enterprises to use reasonable policies, legal and compliant operations.

一、VAT reduction policy at this stage

1. VAT Small-scale taxpayers are exempt from VAT. From April 1, 2022 to December 31, 2022, small-scale VAT taxpayers are exempt from VAT by applying the taxable sales income of 3% levy rate, and the pre-payment VAT items of 3% pre-payment rate are applicable and the pre-payment VAT is suspended.

2. For taxpayers of production and domestic service industries, the deductible input tax for the current period shall continue to be deducted at the rate of 10% and 15% respectively. Article 7 of the Announcement of the General Administration of Customs of the General Administration of Taxation of the Ministry of Finance on Deepening the relevant policies of Value-added Tax Reform and the Announcement of the General Administration of Taxation of the Ministry of Finance on Clarifying the Policy of Value-added Tax Deduction and Reduction for domestic Service Industries, the implementation period of the value-added tax deduction and reduction policy for production and domestic service industries is extended to December 31, 2022.

(3) Taxpayers' income from the provision of public transport services shall be exempt from VAT. From January 1, 2022 to December 31, 2022, income derived from the provision of public transport services by taxpayers will be exempt from VAT.

4. The branches of air and rail transport enterprises shall suspend the pre-payment of VAT. From January 1, 2022 to December 31, 2022, the pre-payment of VAT by branches of air and rail transport enterprises will be suspended.

5. Exempt qualified technology business incubators, university science parks and incubation services for mass innovation Spaces from VAT. From January 1, 2022 to December 31, 2022, income obtained from providing incubation services to incubators is exempt from VAT.

二、Corporate income tax reduction policy at this stage

1. Inclusive income tax relief for small, low-profit enterprises and individual industrial and commercial enterprises. During the period from January 1, 2021 to December 31, 2022, the part of the annual taxable income of small micro-profit enterprises not exceeding 1 million yuan will be included in the taxable income at a reduced rate of 12.5%, and the enterprise income tax will be paid at a tax rate of 20%. During the period from January 1, 2021 to December 31, 2022, the annual taxable income of individual industrial and commercial households does not exceed 1 million yuan, and on the basis of the current preferential policies, the individual income tax will be halved.

2. Further implement preferential income tax policies for small and micro enterprises. From January 1, 2022 to December 31, 2024, the part of the annual taxable income of small micro-profit enterprises exceeding 1 million yuan but not exceeding 3 million yuan shall be included in the taxable income amount at a reduced rate of 25%, and the enterprise income tax shall be paid at a tax rate of 20%.

3. Some taxes and fees of micro, small and medium-sized enterprises in the manufacturing industry will be suspended in the first and second quarters of 2022. Small, medium and micro enterprises in the manufacturing industry that meet the prescribed conditions shall, after filing tax returns in accordance with the law, It can defer the corporate income tax, individual income tax, domestic value-added tax, domestic consumption tax and additional urban maintenance and construction tax, education fee surcharge and local education surcharge for the period of January, February, March, April, May and June 2022 (monthly payment) or the first and second quarters of 2022 (quarterly payment). It does not include tax withheld and remitted, collected and remitted and tax paid when applying to tax authorities for issuing invoices. Medium-sized manufacturing enterprises can defer payment of 50% of the above taxes and fees, and small and micro manufacturing enterprises can defer payment of all the above taxes and fees, and the delay period is 6 months. At the end of the delay period, the taxpayer shall pay the corresponding monthly or quarterly tax in accordance with the law. For the above taxes and fees that have been paid before February 28, 2022 and whose period is January 2022, enterprises can voluntarily choose to apply for tax refund (fee) and enjoy the deferred payment policy.

4. Small, medium and micro enterprises equipment and equipment income tax deduction. Small, medium and micro enterprises in the period from January 1, 2022 to December 31, 2022, newly purchased equipment and appliances, the unit value of more than 5 million yuan, according to a certain proportion of the unit value of the enterprise income tax deduction. Among them, the regulations on the implementation of the Enterprise Income Tax Law stipulate that the minimum depreciation life of equipment and appliances is 3 years, 100% of the unit value can be deducted in the same year. If the minimum depreciation life is 4 years, 5 years, 10 years, 50% of the unit value can be deducted before tax in the current year, and the remaining 50% can be deducted before tax in the remaining year. Enterprises choose to apply the above policy in the year of insufficient deduction of the loss, can be carried forward in the next 5 tax years to make up for, enjoy other extension of the loss carry-over period of the policy can be implemented in accordance with the current provisions.

5. The expenses of public welfare donations that meet the requirements are allowed to be deducted before income tax. An enterprise may deduct from the taxable income amount the portion of its donation expenses used for charitable activities and public welfare undertakings by public welfare social organizations or the people's governments at or above the county level (including the county level) and its departments under The State Council and its institutions directly under it that is less than 12% of the total annual profit; The part exceeding 12% of the total annual profit is allowed to be deducted in the calculation of taxable income within three years after the cart-forward.

6. Increase the deduction rate for R&D expenses of manufacturing enterprises to 100%. Since January 1, 2021, the R&D expenses actually incurred in the research and development activities of manufacturing enterprises, which have not formed intangible assets and are included in the current profit and loss, on the basis of actual deduction according to regulations, and then deducted according to 100% of the actual amount before tax; If intangible assets are formed, 200% of the cost of intangible assets shall be amortized before tax.

三、Other tax reduction policies for enterprises at this stage

　　1. "Six taxes and two fees" exemption for small and micro enterprises. From January 1, 2022 to December 31, 2024, the resource tax, urban maintenance and construction tax, property tax, urban land use tax, stamp duty (excluding stamp duty on securities transactions), cultivated land occupation tax, education fee surcharge, and local education surcharge can be reduced within 50% of the tax rate for small-scale VAT taxpayers, small enterprises with small profits and individual industrial and commercial households. From January 1, 2022 to December 31, 2024, small-scale VAT taxpayers, small low-profit enterprises and individual industrial and commercial households have enjoyed resource tax, urban maintenance and construction tax, real estate tax, urban land use tax, stamp duty, cultivated land occupation tax, education fee surcharge, local education surcharge and other preferential policies in accordance with the law, can be superimposed to enjoy the above preferential policies.

   2. Technology business incubators and mass innovation Spaces are exempt from property tax, urban land use tax and value-added tax. From January 1, 2019 to December 31, 2023, real estate tax and urban land use tax will be exempted for the real estate and land used by national and provincial science and technology business incubators, university science parks and national registered mass maker Spaces for self-use, free of charge or through rental. The income derived from providing incubation services to incubated objects shall be exempt from value-added tax.

    3. Urban land use tax for bulk commodity storage facilities. From January 1, 2020 to December 31, 2022, the urban land use tax on the land for bulk commodity storage facilities owned (including self-use and lease) or leased by logistics enterprises will be reduced by 50% of the applicable tax standard of the land grade.

    4. Urban bus stations and other operational land are exempt from urban land use tax. From January 1, 2019 to December 31, 2023, urban land use tax will be exempted for urban bus stations, road passenger stations, and urban rail transit system operation land.

    5. Wholesale agricultural markets and farmers' markets are exempt from property tax and urban land use tax. From January 1, 2019 to December 31, 2023, the real estate tax and urban land use tax will be temporarily exempted for the real estate and land used exclusively for the operation of agricultural products in the wholesale market and farmers' market (including owned and leased, the same below). For the real estate and land used in the wholesale market and farmers' market of agricultural products which are also engaged in other products, the real estate tax and urban land use tax shall be determined according to the proportion of the area of the trading site of other products and agricultural products.

   6. College student apartments are exempt from property tax and stamp duty related lease contracts. From January 1, 2019 to December 31, 2023, university student apartments are exempt from property tax. College student apartment rental contracts signed with college students are exempt from stamp duty.

　　四、Corporate tax reduction policy during the epidemic in Shanghai

1. Implement a large-scale VAT rebate policy. Priority is given to small and micro enterprises, and for small and micro enterprises and individual industrial and commercial households that pay taxes in accordance with the general tax calculation method, the stock tax credit will be refunded in full before the end of June 2022, and the incremental tax credit will be refunded in full on a monthly basis from April 1, 2022. For enterprises in the manufacturing industry, scientific research and technical services, electricity, heat, gas and water production and supply industry, software and information technology service industry, ecological protection and environmental governance industry, transportation, storage and postal industry, the stock tax credit will be fully refunded by the end of 2022, and the incremental tax credit will be fully refunded monthly from April 1, 2022.

2. Small-scale taxpayers are gradually exempted from VAT. In 2022, air and railway transport enterprises will be suspended from paying VAT in advance, and public transport services such as passenger ferry, bus passenger transport, subway, urban light rail, taxi, long-distance passenger transport and shuttle buses will be exempted from VAT.

3. Enterprise income tax shall be halved for small and low-profit enterprises. The enterprise income tax shall be halved on the part of the annual taxable income of small, low-profit enterprises exceeding 1 million yuan but not exceeding 3 million yuan.

4. Increase the deduction rate of R&D expenses of small and medium-sized enterprises in science and technology to 100%. The proportion of R&D expenses deducted by small and medium-sized enterprises in science and technology will be increased to 100%, and the pre-tax deduction of equipment and equipment for small and medium-sized enterprises will be increased.

5. Expand the scope of the "six taxes and two fees". The "six taxes and two fees" reduction and exemption policies, including resource tax, urban maintenance and construction tax, real estate tax, urban land use tax, stamp duty (excluding stamp duty on securities transactions), cultivated land occupation tax, education fee surcharge, and local education surcharge, will be extended to small, low-profit enterprises and individual industrial and commercial households, and implemented in accordance with the maximum reduction and exemption range stipulated by the state.

6. Extend the tax filing deadline. For taxpayers who file monthly or quarterly returns, the deadline for filing tax returns in April, May and June will be extended to June 30. For enterprise income tax taxpayers, the deadline for filing tax returns for 2021 enterprise income tax final settlement will be extended to June 30. Taxpayers who are affected by the epidemic and still have difficulties in filing tax returns within the prescribed time limit may apply to the tax authorities for an extension of the declaration, or apply for an extension of the payment of tax, with a maximum delay period of 3 months.

7. Due to the impact of the epidemic, taxpayers who have difficulties in paying the real estate tax and urban land use tax can apply for a reduction or exemption of the real estate tax and urban land use tax for their own real estate and land in the second and third quarters of 2022. For enterprises whose housing land is requisitioned by the government in an emergency manner, the corresponding real estate tax and urban land use tax may be reduced or exempted according to regulations.

8. After the processing trade enterprises implement the consistent tax rebate policy on export products, the VAT input tax transferred out in the earlier period is allowed to be deducted. Where the export business of the enterprise applying for tax refund has obtained the indemnity of export credit insurance due to the failure to collect foreign exchange, the indemnity of export credit insurance shall be regarded as the collection of foreign exchange and the export tax refund shall be processed.

五、Applicable tax reduction policy prone risk points and relevant suggestions

1. The legal risk of applying the burden reduction policy when tax exempt income and taxable income are not accounted for separately

Article 16 of the Provisional Regulations on Value-added Tax of the People's Republic of China provides that "taxpayers concurrently engaged in tax exemption or tax reduction projects shall separately account for the sales of tax exemption or tax reduction projects; If the sales amount has not been accounted for separately, no tax exemption or reduction shall be allowed." . In accordance with the provisions of the State Administration of Taxation Announcement No. 11 of 2022, taxpayers' income from the transportation of key epidemic prevention and control guarantee materials, the provision of public transportation services, and the income from life services are exempt from value-added tax. In this regard, it is suggested that if enterprises have concurrent business projects and some projects meet the above tax burden reduction policies, they should be dealt with separately in daily accounting, otherwise the application of the above tax burden reduction policies may lead to legal risks of being required to pay back taxes by the tax bureau.

2. The VAT special invoice is issued for the income of tax exempt items, and the legal risk of burden reduction policy is applicable

Article 21, paragraph 2 (2) of the Provisional Regulations of the People's Republic of China on Value Added Tax stipulates that "where tax exemption provisions apply to taxable sales, special VAT invoices shall not be issued." . According to the provisions of Announcement No. 4 of the State Administration of Taxation in 2020, taxpayers shall not issue special VAT invoices in accordance with the applicable VAT exemption policy in the relevant provisions. In this regard, it is recommended that enterprises should not issue special invoices for VAT if they have obtained income that can be exempted from VAT according to regulations during the implementation of the epidemic prevention policy and choose to enjoy VAT exemption.

3. For the input tax used for tax-exempt items, the legal risk of applying the burden reduction policy

"Notice of the State Administration of Taxation of the Ministry of Finance on Comprehensively Promoting the Pilot Project of Replacing Business Tax with Value-added Tax" (Finance and Taxation [2016] No. 36) document Annex I "Implementation Measures for the Pilot Project of Replacing Business Tax with Value-added Tax" Article 27, "The input tax of the following items shall not be deducted from the output tax: (a)...... VAT exemption......" . In this regard, it is suggested that when enterprises choose to enjoy the burden reduction policy of VAT exemption, they should screen the VAT special invoices obtained, clarify the VAT special invoices obtained by tax exempt items and non-tax exempt items, and carry out the corresponding treatment of VAT input tax respectively. It should be noted that if the purchased items are used for both taxable items and fixed assets, intangible assets and real estate that are not deductible items, they can be deducted normally.

4. Legal risk of incorrect column filling in the declaration of tax-free income

Article 25 of the Law of the People's Republic of China on the Administration of Tax Collection stipulates that "Taxpayers must faithfully file tax returns in accordance with the deadlines and contents of tax returns prescribed by laws and administrative regulations or determined by tax authorities in accordance with laws and administrative regulations. Submit tax returns, financial and accounting statements, and other tax documents required by tax authorities to be submitted by taxpayers in light of actual needs." . According to Announcement No. 4 of the State Administration of Taxation in 2020, taxpayers who enjoy VAT and consumption tax exemptions in accordance with the relevant provisions of the epidemic prevention policy can independently make tax exemption declarations without going through the relevant tax exemption filing procedures. Taxpayers who apply the tax exemption policy shall fill in the VAT tax return form and the corresponding columns of the "VAT Reduction and Exemption Declaration Schedule" when applying for the VAT tax return; When handling the consumption tax return, the consumption tax return form and the corresponding column of the Current Tax reduction (exemption) Schedule shall be filled in. In this regard, it is suggested that enterprises choose to enjoy the preferential policy of VAT exemption, in financial accounting, strictly distinguish between income and taxable income, and correspond to the corresponding columns one by one when filling in the tax return. If errors are found, the tax return should be corrected in a timely manner.

5. If the relevant certificate information of tax reduction and exemption is not kept as required, the legal risk of burden reduction policy shall apply

Article 14 of the Measures for the Handling of Preferential Policies for Enterprise Income Tax stipulates that, "Where an enterprise fails to provide retention materials for reference in accordance with the requirements of the tax authorities, or the retention materials provided are inconsistent with the actual production and operation conditions, financial accounting conditions, relevant technical fields, industries, catalogs, qualification certificates, etc., and cannot be confirmed to meet the conditions specified in the preferential matters, Or if there is fraud, the tax authorities will recover the enterprise income tax concessions they have enjoyed according to law and deal with them in accordance with the relevant provisions of the tax Administration Law." In this regard, it is recommended that enterprises choose to enjoy tax reduction and exemption policies, in strict accordance with tax laws and regulations and normative legal documents, the relevant voucher information is retained for future reference.

According to the preliminary estimates of the Shanghai Municipal Tax Bureau, the implementation of this round of tax-related policies can reduce the burden of relevant industries and enterprises in the city by about 140 billion yuan in 2022. For these tax policies, enterprises should actively study and judge, and make full use of them in combination with their own actual conditions to alleviate the pressure of production and operation. Hillhouse Law Firm will give full play to its professional advantages and effectively help enterprises prevent relevant legal risks; In light of the current epidemic prevention and control needs and the actual situation of enterprises, we will provide more forms of legal services for enterprises to help them resume work and production.