With the end of the first quarter of 2023, it is believed that many companies will receive a refund from the Social Security Bureau one after another, either to enterprises’ basic account or their social insurance account, but some of them may be not that clear about the nature of the payment.
In this article, we interpret the Notice issued by the Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Taxation Administration «Notice of Effectively Conducting the Work of Stabilizing Employment, Improving Skills and Preventing Unemployment through Unemployment Insurance» to help enterprises understand some of the supportive subsidies.
- What is a Stabilization Employment Subsidy
Stabilization employment subsidy, also called in Chinese “稳岗补贴”, is one of the government-supportive subsidies that ensure the stability of the general social situation and protect the rights and interests of the majority of enterprise employees. China’s government encourages enterprises in difficulty affected by the crisis (including international finance, coronavirus, etc.) to try not to lay off employees or to lay off fewer employees, to stabilize enterprise jobs, and to issue subsidies for stable jobs to enterprises affected by the crisis.
- Who can enjoy a Stabilization Employment Subsidy
- Enterprises (with social insurance paid accordingly) that have not laid off employees in the previous year or the layoff rate is not higher than the control target of the national urban survey unemployment rate in the previous year,
- or, the layoff rate of enterprises (with social insurance paid accordingly) with 30 or fewer employees is not higher than 20% of the total number of employees with social insurance paid accordingly.
- What is the standard of the subsidy
The rate of the subsidy is calculated on the basis of “not exceeding the actual amount of unemployment social insurance paid by the enterprise and its employees in the previous year”, and the rate for each size of the enterprise is as follows:
- Subsidy rate for large enterprises: (unchanged) 30%
- Subsidy rate for small, medium, and micro enterprises: from 60% up to 90%.
- What is the payment schedule
The enterprises now enjoy the new mode of “application exempted” (免审即享), that is, enterprises do not need to apply to the Human Resources and Social Security Bureau (hereinafter “Social Security Bureau”), as long as the eligible enterprises, the Social Security Bureau will refund to the enterprises in batches according to a certain percentage of the annual paid unemployment social insurance (as above mentioned) as the stabilization subsidy. The actual disbursement time of the subsidy is subject to receipt.
The Notice also mentions some other subsidy policies, such as “continue to implement the policy of vocational training subsidies”, “issue a one-time training subsidy to keep employees”, and also includes the “periodical deferral of social insurance” that we shared in our previous article. (Reference link: https://www.serviceonnewgrounds.com/practice-retroactive-period-for-periodical-deferral-of-social-insurance/)
According to the National Bureau of Statistics, the state urban “surveyed unemployment rate[1]” was 5.1% on average in 2021 and was controlled to 5.5% in 2022. The Ministry of Human Resources and Social Security, together with relevant departments, will carry out the evaluation of the implementation of the policy, its effect, and the operation of the unemployment insurance fund at an appropriate time, and will control the target in time according to the survey unemployment rate.
Promoting employment is a constant purpose of China’s government. And to protect the basic livelihood of the unemployed people, timely payment of temporary living allowance to the eligible unemployed people can also ease their burden.
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Reference:
Notice by the Ministry of Human Resources and Social Security, the Ministry of Finance and the State Taxation Administration of Effectively Conducting the Work of Stabilizing Employment, Improving Skills and Preventing Unemployment through Unemployment Insurance
http://www.gov.cn/zhengce/zhengceku/2022-05/13/content_5690133.html
(Continued from the previous article)
- Provision on bona fide acquisition of false special invoices
«Circular of the State Administration of Taxation on the Settlement for the Taxpayers Obtaining the False Special Invoice of Value-added Tax without Acknowledgement» defines what is “bona fide”.
It is stated in the Circular that the purchaser shall be deemed to have obtained the false special invoice in good faith if all the following conditions are met:
- a genuine transaction between the purchaser and the seller;
- the sale is made using the special invoices of the province (autonomous region, municipality directly under the Central Government, and cities listed in the plan) in which the purchaser is located;
- all the contents of the special invoices match with the actual ones, such as the name of the seller, the seal, the number of goods, the amount, and the tax amount; and
- no evidence that the purchaser knows that the special invoices provided by the seller were obtained by illegal means.
On the other hand, tax authorities of the purchaser’s location shall grant credit for input tax or export tax refund in accordance with the law, if:
- the purchaser is able to obtain again from the seller a legal and valid special invoice issued by the anti-counterfeit tax-control system; and
- the purchaser has obtained the certificate that the tax authorities in the place where the seller is located have conducted or are conducting an investigation and punishment on the seller’s false special invoices accordingly.
However, if the above conditions cannot be met, the input tax deducted or the export tax refund obtained by the purchasing party shall be recovered accordingly.
In addition, if the taxpayer has obtained in good faith a false special invoice that has been recovered and deducted in accordance with the law, then the taxpayer does not need to consider the provisions of Article 32 of the «Tax Collection Administration Law of the People’s Republic of China»: – If the taxpayer fails to pay the tax in accordance with the prescribed period, and the withholding agent fails to settle the tax in accordance with the prescribed period, the tax authorities shall, in addition to ordering the payment within the prescribed period, impose a late payment fee of five percent of the tax due on a daily basis. If the taxpayer fails to pay the tax in accordance with the prescribed period, the taxation authority shall, in addition to ordering the payment within the prescribed period, impose a late payment fee of five ten thousandths of the late payment of tax on a daily basis from the date of the late payment of tax. In other words, tax authorities will not add the late payment fee arising from the recovery of past taxes.
- Necessary documentation in case the tax inspection happens
Through the above layer-by-layer analysis, accountants of enterprises need to prepare the necessary financial documents to respond to tax inspection, while supporting themselves if they are bona fide purchasers, including but not limited to: –
- the original special invoice was identified as a false invoice
- purchase and sale contracts/business contracts or other contracts involving the invoice
- the goods involved in the incoming order, outgoing order, transfer orders, or transport documents
- relevant accounting documents
- bank payment voucher
- VAT declaration report for the month in which VAT is deducted, and CIT annual return
- statement of the entire business transaction and tax declaration
To sum up, enterprises do not need to be too panicky after receiving the Notice of Tax Inspection. Prepare the above list of supporting materials first and conduct self-inspection after communicating with the relevant tax officer to understand the situation. Companies that have evidence to prove they are bona fide invoice purchasers should actively respond to the tax authorities’ inspection and cooperate with the follow-up investigation. The enterprise will usually pass the tax inspection successfully if they respect all the conditions mentioned previously.
If you have any questions, please feel free to contact us.
References:
«Circular of the State Administration of Taxation on the Settlement for the Taxpayers Obtaining the False Special Invoice of Value-added Tax without Acknowledgement»
http://www.chinatax.gov.cn/chinatax/n359/c448/content.html
China is now fully open! In order to better coordinate the epidemic prevention and control as well as the needs of economic and social development, and to facilitate the people-to-people exchange between China and foreign countries, the National Immigration Administration of PRC has decided to adjust the visa and entry policy starting as of Beijing time at 00:00 on March 15, 2023.
- Valid visas issued before 28 March 2020 by the Chinese visa authorities abroad will resume functioning.
- Foreigners may apply for all types of visas, including tourism and medical treatment.
- Port visas shall resume being issued in line with the relevant laws and regulations.
- The visa-exemption policy for Hainan, visa-exemption cruise policy for Shanghai, visa-exemption policy for foreigners to visit Guangdong from Hong Kong and Macao, and visa-exemption policy for ASEAN tour groups to Guilin, Guangxi shall resume operation.
In recent times, the immigration policies of many countries are updated in real-time. In addition to the reopening policy, other restrictions are listed below for your consideration.
Chinese embassies in many countries notice: From 15 March, antigen testing instead of nucleic acid testing.
According to the latest requirements of the Chinese government regarding the optimization of pre-trip testing measures for people traveling to China, starting from 15 March 2023, passengers flying directly from specific countries[1] to China are allowed to replace nucleic acid testing with antigen testing (including self-testing with kits). In order to facilitate the pre-trip preparation of travelers, the embassies concerned have issued guidelines on epidemic prevention and control.
- Distal testing: Nucleic acid testing within 48 hours before boarding or self-testing with antigen kits, negative results before going to China, positive results please go to China after turning negative.
- Customs declaration: After obtaining a negative test result, fill out the “Health Declaration Card of the People’s Republic of China” through the WeChat app “Customs Passenger Service” (“海关旅客指尖服务”), the Customs APP or the web version to make declaration.
- Airlines are not required to check pre-boarding nucleic acid test certificates and antigen test results.
- In-flight epidemic prevention: Please insist on wearing a mask during the flight and do your personal protection to reduce the risk of infection.
- Entry quarantine: Upon arrival at the port, complete the necessary customs clearance procedures with the customs health declaration code. Customs will test a sample of people with abnormal health declarations or fever and other symptoms in accordance with a certain percentage.
- passengers with positive test results, in accordance with the requirements of the notification letter, go home/living place for isolation, or medical treatment;
- passengers with negative test results, by the Customs and Excise Department in accordance with the “Frontier Health and Quarantine Law of PRC” and other laws and regulations to implement routine quarantine;
- passengers with normal health declarations and tests can pass the entrance.
- Territorial epidemic prevention and control: Passengers should strictly comply with the requirements of territorial epidemic prevention and control after entering the country.
Policies vary from country to country, so it is recommended that you pay attention to the latest Chinese embassy and consulate notices in real-time before making travel arrangements, read them carefully, and follow them to avoid affecting your trip.
Should you have any further questions, please feel free to contact us.
Reference:
Further Adjustment of Visa and Entry Policy for Foreigners to China
Authority: National Immigration Administration
Date: 2023-03-14
https://www.nia.gov.cn/n897453/c1566449/content.html
Notice on Further Adjustment of Visa and Entry Policy for Foreigners to China
Authority: Embassy of the People’s Republic of China in the United States of America
Date: 2023-3-13
http://us.china-embassy.gov.cn/chn/lsfw/zj/qz/202303/t20230314_11040138.htm
[1] Currently, the following countries have issued this notice: France, Italy, Denmark, Spain, Georgia, Tanzania, Nepal, Mongolia, Vietnam, Iran, Greece, Brunei, Thailand, New Zealand, Malaysia, etc.
