China.org.cn | February 8, 2020
People's Daily:
Now we are facing a crucial time in the prevention and control of the novel coronavirus-caused pneumonia outbreak. The supply of goods and materials needed for the emergency response is still facing a shortage in Wuhan, Hubei and other areas seriously stricken by the epidemic. Just now Mr. Yu introduced to us the series of policies including interest subsidies and preferential tax rates enacted by the financial departments of the Central Government to support enterprises manufacturing goods and materials needed for the epidemic prevention and control. My questions are, have the effects of those policies been already seen? And what measures will the relevant tax authorities take to ensure the implementation of these policies? Thank you.
Yu Weiping:
Thanks for your question. To ensure the supply of goods and materials for the epidemic prevention and control work, the State Council executive meeting carried out special research and deployment on Feb. 5. The meeting concluded with the introduction of policies mainly in the following three aspects. The first aspect concerns interest subsidies, aimed at strengthening financial support to key manufacturers of epidemic prevention and control goods and materials, as well as backing them in their recovery and expansion of production capacity to ensure the steady supply of such goods and materials. The Ministry of Finance and the People's Bank of China for the first time jointly adopted the policy of special refinancing and government-funded interest subsidies. This policy presents four features. The first feature lies in the significant reduction of the financing cost of enterprises. As I have mentioned just now, the actual financing cost of enterprises will be reduced to less than 1.6%. This is a major advantage for them. The second feature is the expanded scope of enterprises under such support. The third feature is the simplified procedure in which to implement this policy. Priority is given to urgent cases and special methods are adopted for special cases. The fourth feature is the concerted efforts based on inter-departmental coordination. The National Development and Reform Commission and the Ministry of Industry and Information Technology are responsible for the management of the list of key enterprises while the People's Bank of China will provide the special refinancing. The interest subsidy is funded by the central finance authority, financial institutions will strictly make examination for approval of the release of loans, and the National Audit Office will strengthen supervision. Thus, all the relevant departments form strong synergy in the overall effort.
The second aspect concerns the purchase of reserves. There is a policy which encourages enterprises to manufacture urgently needed key medical goods and materials of good quality and sufficient quantity such as N95 masks and protection suits. These enterprises need not worry about surplus key medical goods and materials for the prevention and control of the epidemic because the government will purchase them all. This policy is in fact a stabilizer for these manufacturers.
The third aspect concerns taxes and fees. Take the supply of goods and materials for example. First, the policy supports key manufacturing enterprises in their expansion of their production capacity by giving them preferential tax rates and fully refunding them excess input VAT credits. This is in fact a measure to increase the cash flow of enterprises. Second, the policy which cancels the five million yuan limit on enterprises and permits the one-off pre-tax deduction of corporate income tax on production equipment purchased for the expansion of capacity is to encourage enterprises to expand their capacity. Third, the policy which exempts relevant drugs and medical equipment from registration fees is to strengthen support for the research and development of drugs and vaccines. Fourth, there is a policy that exempts enterprises that convey key goods and materials for the prevention and control of the epidemic from value-added tax so as to ensure the timely transportation of such goods and materials. Fifth, another policy in this aspect is to help relevant industries. In order to curb the spread of the epidemic, many areas have taken controlling measures, which have affected industries related to people's livelihood such as transportation and service industries. Therefore, the policy which grants preferential rates for value-added tax and corporate income tax to industries including transportation, catering, accommodation, tourism, logistics and civil aviation is a measure to help enterprises pull through the crisis. Sixth, there is another tax policy that aims to encourage the active donation of funds or materials from all sectors of society to relieve the pressure for medical aid funds or materials. On the one hand, by strengthening the existing policies and expanding the scope of organizations accepting donations, the policy permits direct donations to hospitals and enterprises which do so can enjoy preferential tax rates while lifting the limits on the pre-tax deduction ratio. On the other hand, this policy exempts donated goods from value-added tax and consumption tax. In addition, this policy also exempts the temporary allowance and bonuses received by medical staff and epidemic prevention workers from personal income tax.
As for our next step, we will trace the policy implementation and conduct timely research concerning some of the various outstanding problems. This is to ensure that our policies always focus on the prevention and control of the epidemic and will provide help to enterprises trying to resume work and production.
Wang Daoshu:
In terms of the implementation of relevant preferential tax policies as mentioned by the People's Daily just now, I want to make some supplementary points.
As has been introduced by Mr. Yu, according to the decision made at the State Council executive meeting, the Ministry of Finance and the State Taxation Administration have issued several notices and put forth some targeted and forceful preferential tax policies to support the prevention and control of the epidemic. Concerned with the novel coronavirus pneumonia outbreak, General Secretary Xi Jinping placed special emphasis on the detailed implementation of the policies. In accordance with General Secretary Xi Jinping's instructions and the work deployments of the CPC Central Committee and the State Council, the Party committee of the State Taxation Administration, Commissioner Wang Jun and our tax authorities at all levels have resolutely taken the responsibility to implement tax policies to help in the prevention and control of the pneumonia outbreak. We have done this while focusing on higher standards and deploying more concrete measures. The specific measures of the implementation work cover the following aspects:
First, we have paid close attention to the training of officials in the tax administration system. Once the policy was announced this morning, pre-planning arrangements were made to ensure that given the special situation, officials and employees of tax authorities at all levels strengthen their learning and understanding of policies in a proper way. In particular, front-line staff members of the tax administration system as well as personnel of the 12366 tax service hotline must understand the policies well, answer the public's questions accurately, and effectively implement the relevant tax policies.
Second, we are now standardizing the specifications of our operations. We will soon publish guidelines to preferential tax policies to support the epidemic prevention and control work. To ensure the accurate implementation of tax policies, the existing national tax authority's tax service specifications and tax collection and management specifications have been adjusted and optimized accordingly. Tax collection and management information systems have also been adjusted accordingly. All these measures aim to ensure the effective execution of duties by the staff in the front line as well as taxpayers.
Third, given the special circumstances we are facing, we have adopted a strategy of pushing out targeted and in-depth publicity to the relevant taxpayers while avoiding actual physical contact. After the National Development and Reform Commission and the Ministry of Industry and Information Technology determine the target enterprises such as key manufacturers of goods and materials needed for the prevention and control of the coronavirus-caused pneumonia, tax authorities will conduct targeted publicity by sending out information of the policies to these enterprises to help them understand them in a timely way and enjoy preferential tax policies as soon as possible.
Fourth, given this special context, we have innovated and adopted "contactless" methods to allow the public to use our tax services. We have taken a series of measures to optimize the functions of the e-taxation platform and allow the public to pay their taxes online. Should a taxpayer have to go to a physical tax service hall to handle certain tax-related matters, we will stagger their appointments so as to ensure the safety of taxpayers.
Last but not the least, within the taxation system, we have strengthened the accountability system. We have also implemented strict performance appraisals, supervision and accountability, and tightened discipline to ensure that policies are implemented to the letter and that the policy incentives and concerns from the CPC Central Committee and the State Council benefit relevant taxpayers.
At present, we are at a crucial stage in our battle against the novel coronavirus pneumonia outbreak. Tax authorities throughout the country should strengthen their consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, keep in alignment; have confidence in the path, theory, system, and culture of socialism with Chinese characteristics; and resolutely uphold General Secretary Xi Jinping's core position on the Party Central Committee and in the Party as a whole, and resolutely uphold the Party Central Committee's authority and its centralized, unified leadership. We are confident and capable of fully implementing the new preferential tax policies. We are also confident that the CPC Central Committee will be reassured by our work and the people will be satisfied with our efforts. Thanks.