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China: Income tax relief, response to coronavirus (COVID-19)

China: Income tax relief, response to coronavirus

China’s Ministry of Finance and State Taxation Administration has issued new tax measures concerning the coronavirus disease 2019 (COVID-19).

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The guidance, Announcement No. 9 (known in English as: Announcement on tax policies on donations to support the prevention and control of the COVID-19) and Announcement No. 10 (known in English as Announcement on individual income tax policy to support the prevention and control of COVID-19), was issued in early February 2020 to guide the individual income tax treatment for donations made and allowances paid during the outbreak. These announcements are effective retroactively from 1 January 2020.

Announcement No. 9 and Announcement No. 10 provide the following tax relief measures:

  • An individual income tax exemption on receipt of following types of income: (1) temporary subsidy and bonus received by medical and epidemic prevention staff engaged in prevention and control activities, that are in accordance with prescribed standards of local government authorities; and (2) medicines, medical supplies, protective equipment and other benefit-in-kind, excluding cash, provided by employers to their employees for prevention of COVID-19.
  • Full tax deductibility of the following types of donations made by individuals: (1) donations in cash or in kind, made by individuals through non-profit social organisations or governmental authorities at the county level or above or their subordinate departments; and (2) donations in kind, made directly by individuals to designated hospitals undertaking the tasks of the prevention and treatment of COVID-19. 


KPMG observation

The guidance on the tax treatment of subsidies and donations provided for the prevention and control of COVID-19 aims at assisting companies and individuals in addressing difficulties experienced during the outbreak. At this point, the income tax treatment of cash allowances paid to employees during the COVID-19 epidemic is unclear. 

 

For more information, contact a KPMG tax professional:

David Ling | +1 609 874 4381 | davidxling@kpmg.com

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