Add a bookmark to get started

Aerial view of ocean
16 June 20224 minute read

Relaxation of entry restrictions and relief measures announced for businesses affected by COVID-19 lockdowns

After nearly three months, China has lifted the lockdown in Shanghai. Most residents can travel freely within Shanghai with negative COVID-19 test results valid for 72 hours and businesses are starting to resume, albeit buildings and districts with COVID-19 positive cases or close contacts are still locked down. In Beijing, residents are also subject to frequent COVID-19 tests and sporadic lock downs or quarantine orders. Various relief measures have been brought forward by the Chinese government to accelerate the economic and employment recovery.

Waiver of PU Letter for work and family visit visa

Since March 2020, China has tightened its border controls, requiring foreign nationals applying for certain visas to obtain an official letter of invitation (PU Letter), which had become a key obstacle for expatriates and their dependents wanting to return or go to China. This stringent restriction appears to be lifted gradually. In June 2022, certain Chinese Embassies and Consulates-General posted notices on their websites to adjust the requirements for foreign nationals who will work in China and their dependents to enter into China, waiving the PU Letter requirement for Z Visa and S Visa applications. The waiver of PU Letter would be a relief for many visa applicants who have been prevented from entering into China for more than 2 years. It is expected that more Chinese Embassies and Consulates-General around the world will follow the trend, although the details of the new policy may vary slightly. Nevertheless, PU Letter is still a must for business visa (M visa) applicants. Foreign nationals intending to visit China are advised to contact the local Chinese Embassies or Consulates-General for the latest documentation and process requirements for different visa applications.

Provision of subsidies to support employment

The lockdowns in certain cities caused an increase in the unemployment rate. To stabilise the economy, the State Council put a package of policies in place to reduce the capital pressure on employers and boost employment, including (1) providing a job retention subsidy for retaining employees to all participating enterprises under the unemployment insurance scheme that are severely hit by the COVID-19 pandemic; and (2) offering a job expansion subsidy to companies employing college graduates of this year after signing employment contracts with such fresh grates and getting them enrolled in the unemployment insurance scheme. Responding to the job loss in the labor market, local governments followed the central polices and rolled out more detailed stimulus initiatives, setting out the local standards of such subsidies. The amount of subsidies may vary among different provinces and cities. For example, in Shanghai the subsidy for (1) is RMB 600 per employee and (2) is RMB 2,000 per employee. This employment subsidy policy is valid until the end of 2022.

Expanded eligibility of Value Added Tax (VAT) rebates

On 7 June 2022, the Ministry of Finance and State Tax Administration (STA) issued an announcement to further broaden the scope of enterprises eligible for VAT credits refunds, adding seven industries including (1) wholesale and retail; (2) agriculture, forestry, animal husbandry, and fishery; (3) hospitality and catering; (4) household service, repairs, and other services; (5) education; (6) healthcare and social work; (7) culture, sports, and entertainment into the scope of eligibility. Back in March 2022, the VAT rebate policy was only applicable to six industries, including (1) manufacturing; (2) scientific research and technology services; (3) electricity, heating, gas, and water production and supply; (4) software and information technology services; (5) ecological protection and environmental governance; (6) transport, logistics, warehousing, and postal. On 10 June 2022, the Shanghai Municipal Tax Bureau released the Guidelines on the Implementation of Tax Policies of the Shanghai Action Plan to Accelerate Recovery and Revitalization of the Economy, rolling out measures to accelerate the refund of outstanding VAT credits for medium-sized and large enterprises, and committing to completing the refund of outstanding VAT credits for all kinds of eligible enterprises by 30 June 2022. Companies are advised to contact the competent tax authorities for the eligibility of VAT rebates and to strengthen internal control measures in order to prevent VAT rebate frauds.

Print