Shanghai to further cut tax for small businesses during COVID-19 pandemic
Updated 15:58, 01-Apr-2022
Chen Tong

The ongoing Omicron outbreak in Shanghai has affected many businesses in the city, especially the small and micro-sized enterprises. To help tackle their headaches, Shanghai has announced a series of measures to offer support.

One of the important policies is further tax reductions. Starting from April 1, value-added tax will be waived for small enterprises that pay a three percent tax rate.

Shanghai Mingyan Enterprise Management is one of such small firms that would benefit from such exemption. The company manages 25 fresh markets in town, but almost all of them shut down because of the latest COVID-19 outbreak.

Based on the new policy, if the firm's profits equal last year's amount, it can save over $1,500 (9,524 yuan) in tax payment.

"It may not seem like much, but it makes a difference," said Xu Lei, finance director of Mingyan Enterprise Managements.

Small and micro-sized firms have always been an important target for the city authorities to offer support. While most companies are asked to work from home, the Shanghai tax bureau has also upgraded its online declaration system.

"Small, medium and micro-enterprises can send applications online to enjoy preferential tax policies. It's a great deal for business owners, as most have to work from home," said Huang Qian, deputy chief of corporate income tax at Shanghai Tax Bureau in Xuhui District.

In addition to tax reductions, the city has also offered a basket of support measures including rent reductions, free COVID testing for people in some industries such as logistics, and financial subsidies for social workers on duty during the pandemic.

Wang Huayu, deputy director of Fiscal Taxation Law Research Center at Shanghai Jiaotong University said offering such measures at this challenging time has reflected the country's care for these businesses and workers.

"These policies give room for support for small businesses and certain groups of workers in the current situation. This also makes them feel they can help the country under a relatively tight financial situation given the pandemic," said Wang.

Shanghai has estimated that more than one million companies will benefit from these support measures. That amounts to some $22 billion in tax cuts this year.

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