Shanghai has been fighting a COVID-19 outbreak for two months. The situation has created unprecedented challenges for the city's small and medium-sized companies.

One of such companies is Sanyou Biopharmaceuticals, which has been in operation since Shanghai first launched the closed-off management system in late March to fight a COVID-19 outbreak. But the broken delivery chain has slowed payments.

In April, new tax policies were implemented to support some key industries in China. Starting April 1, the tax refund for some companies is now being paid to companies in cash.

Sanyou received a total of 1.34 million yuan ($199,400) in tax refunds, which helped solve some of its problems.

"We couldn't send our invoices out, so it has been very slow to get our money back from our clients, which affected our capital turnover. So, this tax refund can help us to pay for equipment purchases and salary payments," said Huang Peiwen, Sanyo Biopharmaceuticals' finance manager.

Sanyou is not the only firm to benefit from this new policy.

As of May 15, some 37.8 billion yuan in tax refund was paid to 47,000 companies in Shanghai. Nearly 97 percent of them are micro-sized companies.

Though the COVID-19 situation in Shanghai is getting better, many companies have not resumed operations.

The Shanghai Tax Bureau said it's also speeding up the tax refund procedures.

"We are required to return the refund in 10 working days. But, usually, we will speed up the progress of between six and seven days," explained Yang Yiye, deputy chief of the goods and services tax section of Shanghai Tax Bureau's Xuhui District branch. 

Tax policies are among the newly implemented government measures aiming to help stabilize China's economy during the COVID-19 outbreak.

The State Council held an executive meeting on Monday, emphasizing the importance and urgency of bringing China's economy back to normal.

One of the important tasks is to further cut tax burdens. It's estimated that the total value of tax rebates and refunds for companies will reach 2.5 trillion yuan this year.