State Council: Small and medium-sized enterprises are exempted from three social insurance taxes for five months

The social security issue that small and medium-sized enterprises have been concerned about has finally been changed from " deferred payment " to " exemption " .

On February 18 , Premier Li Keqiang presided over an executive meeting of the State Council and decided to temporarily reduce and exempt corporate social security fees and implement a policy of postponing corporate payment of housing provident funds, taking multiple measures to stabilize enterprises and employment.

Specifically, the corporate pension, unemployment and work-related injury insurance premiums will be temporarily reduced or exempted. In all provinces except Hubei, the above three fees can be exempted for small and micro enterprises from February to June , and the fees can be halved for large enterprises from February to April ; Hubei Province can exempt all types of insured enterprises from February to June .

At the same time, before the end of June, enterprises can apply for deferred payment of housing provident funds. During this period, provident fund loans for employees who are unable to repay normally due to the impact of the epidemic will not be treated as overdue.

" The five -month exemption of social security for small and medium-sized enterprises is a strong and timely policy. The five- month exemption not only takes into account the need to tide over the difficulties with enterprises and share the impact of the epidemic, but also allows enterprises to recuperate after the epidemic turns and helps them recover as soon as possible through tax and fee reductions.

The one-time introduction of these policies will help stabilize expectations, stabilize employment, and avoid short-term shocks from becoming long-term, " Zhang Bin, director of the Taxation Research Office of the Institute of Finance and Economics of the Chinese Academy of Social Sciences, told the 21st Century Business Herald reporter.

Five -month social security exemption for small and medium-sized enterprises

According to the original Spring Festival holiday schedule, all types of enterprises across the country should resume work in full on January 31 .

Affected by the epidemic, the resumption of work at the national level has been postponed to February 3 , and many economically developed provinces have further postponed the resumption of work to February 10. The actual situation is that due to the impact of personnel control and traffic blockades, some small and medium - sized enterprises are still unable to resume work in the true sense.

The delay in starting work has brought operational pressure to enterprises, and the pressure on small and medium-sized enterprises with weaker risk resistance is particularly obvious. Since the beginning of February, local governments have successively introduced policies to help small and medium-sized enterprises tide over difficulties, including rent reduction, tax and social security deferral, reduction and exemption of some local taxes and fees, etc. Allowing the deferral of social security payment, that is, " delayed payment of social security " is a relatively common measure.

However, many companies said that delaying the payment of social security is not enough to quench their thirst.

" Enterprises can only survive by operating normally, and they do not have that much working capital support. Now employee salaries, social security, loan interest, rent, equipment depreciation costs, etc., these cannot all be borne by the enterprises. Now employees do not go to work, but salaries still have to be paid, and they also have to be insured. The entire burden falls on the enterprises. " The owner of a small industrial enterprise in Beijing told the 21st Century Business Herald reporter.

He also said that since enterprises did not operate in February, no tax revenue would be generated, and the tax cut would have little effect. Although the deferral of social security payment avoids the immediate payment pressure, it still has to be paid sooner or later.

Previous policies mainly focused on temporarily reducing the rates of work-related injury and unemployment insurance, but the bulk of the spending was on pension and medical insurance, which placed a heavy burden on companies.

On February 18 , the State Council Executive Meeting passed a policy decision to exempt small and micro enterprises from paying corporate pension, unemployment, and work-related injury insurance premiums from February to June , which will undoubtedly alleviate the pressure on the above-mentioned business owners.

Taking Beijing as an example, in 2019, the enterprise contribution rate for pension insurance was 16% , medical insurance was 8% , unemployment insurance was 0.8% , maternity insurance was 0.8% , and work-related injury insurance varied from industry to industry, ranging from 0.5% to 2% . The pension insurance, which is the biggest burden for enterprises, as well as unemployment and work-related injury insurance, can be exempted for 5 months.

Large enterprises' social security benefits will be halved for three months

The State Council executive meeting pointed out that the phased reduction or exemption of enterprise pension, unemployment and work-related injury insurance contributions will alleviate the impact of the epidemic on enterprises, especially small and medium-sized enterprises, and allow enterprises to have a buffer period after resuming production.

" This tax relief policy is tiered. The delay in resuming work has affected almost all companies. Companies are not operating normally and still have wage expenses, and large companies are also facing operating pressure. Giving large companies a three- month social security reduction of half is a cost-sharing measure.

Since small and medium-sized enterprises contribute more to employment and are more fragile in operation, they need to share more burdens and support more, so the policies are more targeted. Hubei is the province most affected by the epidemic, so special policies are given to the region. " Zhang Bin said.

A recent questionnaire survey of middle and senior managers from 761 companies conducted by the School of International Business at the University of International Business and Economics found that maintaining cash flow is the main challenge facing companies, and the larger the company, the longer the cash flow can be maintained.

For small and micro enterprises with less than 50 employees, only 42.67% of them can maintain cash flow for more than 3 months , while for large and medium-sized enterprises with more than 500 employees, this proportion can reach 80.50% .

The State Council executive meeting pointed out that the implementation of the above policy takes into account the balance of the social security fund and other factors, and can ensure that various social security benefits such as pensions are paid on time and in full.

Zhang Bin pointed out that the part of the enterprise payment should be given a phased reduction or exemption. Because the part of the social security individual payment goes into the " personal account " , if it is reduced or exempted, it will cause the accumulation of the personal account to decrease, affecting personal interests. The part of the enterprise payment goes into the social security " coordinated account " . For some provinces where the income is not enough to cover the expenditure, the inter-provincial adjustment of pensions or special fiscal transfer payments can be used to ensure the full payment of pensions.

In addition to social security exemptions, housing provident fund policies are also more relaxed. Before the end of June, companies can apply for deferred payment of housing provident funds. " Housing provident funds, whether they are individual contributions or corporate contributions, ultimately reflect the personal interests of employees, which is different from social security. Allowing companies to apply for deferred payment of housing provident funds can ease the payment pressure of companies and will not cause too much loss to the personal interests of employees, " said Zhang Bin.

Employment stabilization policies to offset the impact of the epidemic

The State Council executive meeting also pointed out that it is necessary to issue scientific and classified epidemic prevention guidelines for resumption of work and production as soon as possible, guide local governments to reasonably determine the conditions for resumption of work and production, and do a good job in employment for key groups.

Organize migrant workers to return to work in an orderly manner. Except for areas with severe epidemics and high risk of spread, correct unreasonable regulations that restrict workers from returning to work. Speed ​​up the formulation of a plan for postponing the recruitment and reporting of college graduates, and increase online recruitment efforts. Speed ​​up the introduction of support policies for individual industrial and commercial households.

" This policy of social security exemptions is a great move, but we still need to be able to operate normally and earn money normally. " The head of a manufacturing company in Jiangsu told the 21st Century Business Herald reporter.

At present, many provinces are doing a good job in epidemic prevention and control while promoting the orderly resumption of work and production of enterprises. Some provinces have gradually restored intra-provincial transportation, and some cities and counties have even provided financial subsidies for manufacturing enterprises to recruit workers.

The Standing Committee of the Political Bureau of the CPC Central Committee held three consecutive meetings on January 25 , the first day of the first lunar month, February 3 , the tenth day of the first lunar month, and February 12 , the nineteenth day of the first lunar month to study the epidemic prevention and control work.

While deploying epidemic prevention work, the Standing Committee meeting on February 12 also made overall arrangements for current economic work, requiring greater efforts in macro-policy regulation and the study and formulation of corresponding policy measures in response to the impact of the epidemic.

This State Council executive meeting has launched a comprehensive package of measures including reducing social security fees, promoting resumption of work and production, and stabilizing employment.

Liu Shijin, former deputy director of the Development Research Center of the State Council, recently said that the key is to control the duration of the epidemic and prevent an unexpected short-term shock from turning into a medium-term or even long-term shock.

Liu Shijin said that if the epidemic can be basically controlled by the end of February, monetary policy and fiscal policy measures will be mainly limited to the scope of " precise rescue " , and macroeconomic policies as a whole should maintain continuity and stability and maintain due strategic determination.

To avoid excessive macroeconomic policy expansion, we should shift the focus of the crisis to substantively deepening structural reforms.

Zhang Bin said that since the epidemic is a short-term shock to the economy, a phased tax reduction and exemption policy should be introduced to hedge it. The policy should be strong enough to offset the pressure of stabilizing growth.

Taking into account the short-term revenue and expenditure gap, the short-term deficit ratio can be appropriately increased, which will not have a long-term impact on fiscal sustainability.

The key to introducing this series of positive policies is to smooth out short-term shocks as quickly as possible without affecting the established pace of reform.

(Source: Cross-border Sellers Teahouse)