May 2020
Circular on A Temporary Reduction and Exemption of Social Insurance Premiums for Businesses (Mainland China)
Joyce Wen
The Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Administration of Taxation issued the Circular on issued the Circular on A Temporary Reduction and Exemption of Social Insurance Premiums for Businesses (the "Circular"). The Circular aims to alleviate the difficulties faced by businesses, promote the orderly resumption of operation and production, and support the stabilization and expansion of employment. The Circular states three measures for the exemption, reduction or deferral of payment for pension insurance, unemployment insurance and occupational injury insurance by businesses.
The Circular stipulates that starting from February 2020, provinces other than Hubei Province may, depending on the impact of the epidemic and the funding situation, start exempting micro, small, and medium-sized businesses from contribution payments to the three social insurances for a period of no more than 5 months. For other participating employers such as large businesses (not including government offices), their contribution payments to the three social insurances may be reduced for a period of up to three months. For Hubei Province, contributions to the three social insurances by all participating employers (not including government offices) may be exempt for a period of no more than five months. Businesses facing serious hardships in production or operation due to the epidemic may apply for deferred contribution payments for a period of no more than six months, during which no overdue fine will be imposed.
The Circular requires provincial governments to effectively assume the responsibility to ensure that all social insurance benefits are paid in full on time. In 2020, the percentage of government-owned capital allocated to supplement basic pension insurance for employees of businesses will be increased to 4% so as to provide greater support to impacted areas.
In addition, the Circular also indicates that the provinces can make reasonable adjustments the 2020 budget based on the deductions and exemptions. The specific implementation measures from the provinces shall be reported to the Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Administration of Taxation for recordation before March 5.
The Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Administration of Taxation issued the Circular on issued the Circular on A Temporary Reduction and Exemption of Social Insurance Premiums for Businesses (the "Circular"). The Circular aims to alleviate the difficulties faced by businesses, promote the orderly resumption of operation and production, and support the stabilization and expansion of employment. The Circular states three measures for the exemption, reduction or deferral of payment for pension insurance, unemployment insurance and occupational injury insurance by businesses.
The Circular stipulates that starting from February 2020, provinces other than Hubei Province may, depending on the impact of the epidemic and the funding situation, start exempting micro, small, and medium-sized businesses from contribution payments to the three social insurances for a period of no more than 5 months. For other participating employers such as large businesses (not including government offices), their contribution payments to the three social insurances may be reduced for a period of up to three months. For Hubei Province, contributions to the three social insurances by all participating employers (not including government offices) may be exempt for a period of no more than five months. Businesses facing serious hardships in production or operation due to the epidemic may apply for deferred contribution payments for a period of no more than six months, during which no overdue fine will be imposed.
The Circular requires provincial governments to effectively assume the responsibility to ensure that all social insurance benefits are paid in full on time. In 2020, the percentage of government-owned capital allocated to supplement basic pension insurance for employees of businesses will be increased to 4% so as to provide greater support to impacted areas.
In addition, the Circular also indicates that the provinces can make reasonable adjustments the 2020 budget based on the deductions and exemptions. The specific implementation measures from the provinces shall be reported to the Ministry of Human Resources and Social Security, the Ministry of Finance, and the State Administration of Taxation for recordation before March 5.
