100 FAQs about Shanghai's 28 Policy Measures to Combat the Epidemic and to support businesses

On February 7th, Shanghai Municipal People's Government issued the <Policy Measures of Shanghai Municipal People's Government on Effective Prevention and Control of the Epidemic as well as Support for the Steady and Healthy Operation of Enterprises>(referred to Shanghai's 28 Policy Measures hereinafter). Currently, quite a number of detailed implementation plans referencing provisions in the document have been announced and entered into the implementation phase. These measures have been very instrumental for the business community's fight against the epidemic.  

Given the enterprises' keen interest in learning about the implementation of these measures on the ground, The CBN have, in collaboration with Jiemian.com , reached out and collected many issues and questions of the businesses' concern. Departments of Shanghai Municipal People's Government, such as Shanghai Development and Reform Commission, Shanghai Municipal Commission of Economy and Informatization, Shanghai Municipal Finance Bureau, Shanghai Municipal Tax Service, Shanghai Civil Affairs Bureau, Shanghai Municipal Commission of Commerce, Shanghai Municipal Commission of Science and Technology, Shanghai Municipal State-owned Asset Supervision and Administration Commission, Shanghai Municipal Financial Regulatory Bureau, Shanghai Municipal Administration of Culture and Tourism, the People's Bank of China Shanghai Head Office as well as China Banking and Insurance Regulatory Commission Shanghai Bureau were interviewed for official interpretations. The compellation of 100 FAQs about Shanghai's 28 Policy Measures to Combat the Epidemic and to Support Businesses was based on the responses and official documents of the aforementioned line departments.

It is our hope that this reductive presentation form of Q&As could help businesses better understand those policy measures and better navigate through the epidemic period with orderly resumption as well as stable and healthy development.  

I. Support for Enterprises to Navigate Through the Epidemic

1. Which companies are "enterprises playing key roles in the epidemic prevention and control"?

A: The official name list is jointly produced by the NDRC and MIIT, which will include companies certified by Provincial People's Governments and filed at NDRC and MIIT.

2. Our company produces and sells key prevention supplies and we anticipate big excess inventory after the epidemic. According to Shanghai's 28 Policy Measures, these excess inventories could either be underwritten by the government or be taken over as governmental reserves. Can we count on the government for implementation on the ground?

A: The Shanghai Municipal Leadership Group on the Work of COVID 19 Prevention and Control is responsible for the certification of supplies being requisitioned, imported and produced for the fight against COVID 19. In case of excess in these supplies which proved difficult to sell by the companies, the excess, after evaluation by relevant authorities, will be taken over by Shanghai municipality and dealt with through the local reserve system.   

Relevant rules and processes are being drafted. The implementation will be initiated when the epidemic prevention and control completes.

3. Our company has imported masks which are directly donated to the civil affairs bureau and organizations designated by the bureau to combat the epidemic. Are the masks entitled to the tax exemption policy for imported supplies for epidemic prevention and control?  

A: A notice was jointly issued by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration, specifying a moderate extension of tax exemption coverage of the Interim Measures to Exempt Charitable Donations from Import Duties to ①reagents, disinfectants, protective wears, ambulance, epidemic prevention vehicle, mobile disinfection unit and mobile command truck. Coverage was also extended to ②Goods that are donated directly after import from overseas/Special Customs Areas by government department, QUANGOs, businesses, civil societies, individuals, foreign citizens in or coming to China. Export Processing Companies are included as eligible donors. ③Provincial level Civil Affairs authorities and their designated organizations are included as donation receivers. The validity period of this notice is from January 1st 2020 to March 31st 2020.  

Qualified donations will be exempted from import duty as well as import-linked VAT and consumption tax.   

4. Our company's main business is international trade. Upon receiving the emergency order from Shanghai Municipal Health Commission, we started to import large quantity of supplies for epidemic prevention and control. Is our company a beneficiary of the import duty exemption policy?

A: According to the notice jointly issued by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration, from January 1st 2020 to March 31st 2020, the policy covers imports which are organized by health authorities and are directly used for epidemic prevention and control. The imported goods has to fall into one of the following categories to be eligible for the policy: reagents, disinfectants, protective wears, ambulance, epidemic prevention vehicle, mobile disinfection unit, mobile command truck as well as goods specified by the Interim Measures to Exempt Charitable Donations from Import Duties. The fiscal authorities, together with the health authorities, will be producing a list of eligible importers and a list of eligible goods, which will be given to local customs and tax authorities through official communication.  

If your company and the imported goods are both in the lists, you will benefit from the import duty exemption policy.

5. How to process formalities for eligible duty-free imports?

A: According to the notice jointly issued by the Ministry of Finance, the General Administration of Customs and the State Taxation Administration, qualified imports declared between January 1st 2020 and March 31st 2020 can be released after registration with necessary formalities for duty exemption being processed afterwards. Regarding duties that are already paid for goods qualified according to this policy, importers can file for refund at the customs before September 30th 2020.   

For more implementation details, please call Shanghai Customs' hotline 12360 for further explanation. For inquiries about how to obtain proof for input VAT that's not deducted, please call tax authority's hotline 12366.    

6. "Registration fees are waived for COVID 19 prevention-related drugs and medical devices." How is this policy being implemented?

A: Shanghai FDA, in accordance with its purview, will waive registration fees for medical devices' applications that have entered the emergency approval mechanism and are filed in Shanghai as COVID19-related prevention and control products.

Registration fees for new drug applications that have entered the extraordinary approval procedures and are filed for prevention and treatment of COVID 19 will be waived.

This policy started to take effect on January 1st 2020 and will expire pending further notice from State-level authorities.  

7. According to Shanghai's 28 Policy Measures, support will be given to effort overcoming the obstacles in the R&D and production of innovative products for epidemic prevention and control. How will the Special Project for R&D and Production of Innovations in COVID 19 Diagnosis and Treatment be organized?  

A: This special project focuses on supporting the R&D and production of key drugs and equipment for COVID 19 prevention and control. Funding support will kick in after applications are filed. The project encourages innovation and tolerates failures. There are standardized funding support and special funding support. For applications that are less than 1 year into the construction phase and have completed all the necessary registrations or obtained all the necessary production qualifications, a standardized funding support which is up to 30% of the recognized total investment and/or RMB 20 million will be applied. Application without registration or production qualifications will be given a funding support that is up to 10% of the recognized total investment and/or RMB 1 million.   

In principal, a maximum of 15 projects will be approved.

The official guidebook for the project can be obtained online and is jointly issued by Shanghai Development and Reform Commission as well as Shanghai Municipal Commission of Economy and Informatization. A third party institution will be entrusted for the digitalized handling of application filings.  

8. Are there additional policies for the listing of high tech firms pertinent to the fight against the epidemic?

A: The policy stipulates that high tech companies pertinent to the prevention and control of COVID 19 will be supported and encouraged to list at the Sci-Tech Board of Shanghai Stock Exchange.

Under current laws and regulations, the Shanghai Stock Exchange will reach out to qualified enterprises to navigate them through the listing process and answer their inquiries along the way. Once all the necessary materials are in place, the application will be accepted and dealt with at once. Appraisal professionals who have deep insights into the bio pharmaceutical industry will be organized to expedite the evaluation. The difficulty on the part of IPO issuers and intermediaries are fully considered by deducing the epidemic period from the time limit for issuers to answer inquiries from the SSE.   

9. Our company produces supplies to combat the epidemic and we are expanding our capacity. We made an emergency purchase of raw materials in large quantity and reinvented a production line, which generated large amount of overpaid VAT. Can we apply for rebate?

A: Yes! Eligible companies producing key supplies for the epidemic prevention and control can file with tax authorities for full rebate of overpaid VAT on a monthly basis. The company list will be jointly drafted by Shanghai DRC and Shanghai Municipal Commission of Economy and Informatization.    

10. Our company purchased a batch of N95 masks in January and donated them to a designated hospital for treat COVID 19 patients. How will the VAT be levied on this batch of donation?  

A: VAT can be exempted. Starting from January 1st, organizations and individual industrial and commercial households will be exempted from VAT levy on donations that they produce, process (by consignment) and purchase to charitable organizations, people's governments of county-level and above, line ministries and agencies as well as designated hospitals for the fight against the epidemic.