31. My company is a coffee shop chain which has been seriously impacted by the epidemic. Is the extension of loss carryover to 8 years applicable for us?

A: Companies in four major categories of industries facing tremendous difficulties caused by the epidemic are entitled to an extension from 5 years to 8 years for the carryover of losses incurred in 2020.

Coffee shops belong to the catering industry, one of the four major categories. If the income from catering service is regarded as the prime operating income and accounts for over 50% of the total income (exclusive of non-taxable income and income from investment), the losses incurred by the impact of the epidemic in 2020 will see a carryover extension from 5 to 8 years.

32. During the epidemic, I consider donating cash and medical supplies. Can I have a 30% deduction from the income when calculating the income tax according to individual income tax law?

A: No, a full deduction will be exercised. Cash and medical supplies donated by individuals through non-profit organizations or people's governments at and above the county level and other governmental departments are entitled to full deduction when calculating taxable income.

33. Will the donations made by individuals through collective donation channel of the governmental departments be entitled to pre-tax deduction?

A: Yes. Individual donations mobilized by the governmental departments, enterprises and public institutions can be deducted with credentials of collective donation receipt and employee income statement.

34. Are the subsidies and bonuses given to health workers and workers who have participated in the epidemic prevention and control exempted from taxation?

A: yes. Temporary subsidies and bonuses given to medics and workers who have participated in the epidemic prevention and control according to the criteria of government regulations are exempted from individual income tax. The criteria mentioned above include criteria for subsidies and bonuses set by governments at different levels.

35. I'm an ordinary salary earner and have a fixed employer. Is it necessary that my personal donation has to be deducted from my salary when paid on a regular basis by my employer?

A: It is optional. According to the rules, if a resident obtains income from wages and salaries, he or she may choose to deduct it at the advanced payment of withholding or at the time of annual final settlement.

36. During the epidemic, individually-owned businesses that pay fixed amounts of taxes at fixed dates will be lawfully exempted from paying lump-sum taxes. How to apply?

A: It's an automatic process. No application is needed. To support individually-owned businesses that pay fixed amounts of taxes at fixed dates to restore operation during epidemic prevention and control period, tax authority will lawfully and reasonably reduce the fixed-amount taxes paid by individual businesses who suffer income decline due to the epidemic impact with an aim to reduce their tax burden. To prevent close contact and for the convenience of taxpayers, tax authorities will make unified adjustment.

37. Since there is measure to reduce tax burden for individually-owned businesses, is it possible to introduce additional tax break for the medium, small and micro-sized enterprises?

A: Relevant supportive tax policies have been introduced to support severely impacted industries and companies, including the medium, small and micro-sized enterprises. For small and micro-sized companies, supportive tax policies are as follows:

In terms of VAT, income from providing services, such as public transportation, life service and express delivery service for people's daily necessities will be exempted from VAT.

In addition, from March 1st to May 31st of 2020, for the small-scale taxpayers in provinces, autonomous regions and municipalities directly under the central government except for Hubei Province, their taxable sales income which was previously levied at tax rate of 3% sees a reduction of value-added tax rate to 1%; pre-paid VAT items which were previously levied at tax rate of 3% are levied at the rate of 1%..

In terms of corporate income tax, at present, companies in four major categories of industries facing tremendous difficulties caused by the epidemic are entitled to an extension from 5 years to 8 years to the maximum for the carryover of losses incurred in 2020. The four major categories include transportation, catering, accommodation and travelling (both travel agency and related service, and scenic spot management). Please refer to the National Industries Classification for detailed criteria. The prime operating income of those companies should account for over 50% of the total income (exclusive of non-taxable income and income from investment) in 2020.

Favorable policy of low- rate corporate income tax is currently applicable for the small and micro-sized companies, meaning that the annual taxable income of a small-scale and low-profit enterprise shall be reduced to 25% of the total if it does not exceed 1 million yuan and the corporate income tax rate shall be 20%; the annual taxable income shall be reduced to 50% of the total if it exceeds 1 million yuan but not surpass 3 million and the corporate income tax rate shall be 20%.

38. The epidemic has brought huge impact on the capital chain of companies whose prime businesses are international tourism and visa processing. How to support those companies and help them survive?

A: Tourism industry bears the brunt of the epidemic during which customer demand for travelling slumps hence results in liquidity squeeze for tourism companies. To this end, Shanghai Municipal Administration of Culture and Tourism issued Several Policies and Measures of Shanghai to Fully Prevent and Control the Epidemic and Support the Steady and Healthy Development of Tourism Companies in a view to help tourism companies to the best of its ability to tide over difficulties.

Firstly, efforts are made to ease the burden on tourism companies. For travel agencies that have paid security deposit according to the law and have acquired travel business license, 80% of its existing deposit will be temporarily refunded and shall be restituted before February 5th, 2022.

As of February 28th, 776 applications have been accepted, among which 772 cases have been examined and verified. 760 cases have been transferred to banks and a total of RMB 320 million has been released. Meanwhile, the temporary refund is ongoing orderly. It is expected to benefit 1400 travel agencies with a total amount of about RMB 500 million.

Secondly, the role of earmarked funds will be brought into full play. Efforts are made to expedite the appropriation of 2019 earmarked fund for tourism and try to start fund appropriation by the end of the first quarter or the beginning of the second quarter for projects that have been appraised. Meanwhile, the application of 2020 tourism special fund will be started as soon as possible with focuses on boosting Shanghai tourism development, elevating the image of Shanghai tourism, improving tourism-related public services and enriching major tourism activities after the epidemic.

Thirdly, financial aid will be enhanced. Efforts are made to help Shanghai culture and tourism companies with access to Shanghai banks with special quota of re-lending, support Shanghai medium, small and micro-sized culture and tourism companies to solve financial difficulties and increase their liquidities in an effort to jointly overcome the difficulties at the current stage.

Fourthly, the industry association should play a bigger role. Guidance will be given to Shanghai Tourism Industry Association to play a bigger role so as to form synergy across the industry. The association takes the initiative to give up the charge of membership fees for the first half of 2020.

39. Who can enjoy the policy which states that "construction fee payers for cultural undertakings in life service industry will be given fiscal subsidies according to the severity that they have been affected by the epidemic and the actual paid fees"? How to apply?

A: Construction fee payers for cultural undertakings in life service industry refer to units and individuals who provide entertainment services. Shanghai has made it clear that from January 1st to 3 months after the epidemic is over, construction fee payers for cultural undertakings in life service industry are entitled to fiscal subsidies that are equal to 100% of its actual paid fees.

The application for the subsidy will be done with "one-to-one" online approach. Upon receiving information sent by E-Tax of Shanghai Municipal Tax Service after each quarterly application period ends (the first starts in April of 2020), related payers can fill in the Application Form for Fiscal Subsidies of Construction Fee for Cultural Undertakings online. Most of the information needed is automatically uploaded by taxation management system, the payers are only required to supplement and confirm the information. Once approved, the eligible payers will receive the subsidies before the 10th of the following month after application and will be notified about the progress by means of short messaging service, E-tax, All-in-One Portal among others.

You can refer to the sections of Public Notice of Public Government Affairs on the website of Shanghai Municipal Tax Services.

III．Financial aid will be enhanced to help companies overcome difficulties.

40. What credit aid will be given to the industries deeply impacted by the epidemic?

A: Banking institutions in Shanghai should not suspend, withdraw or postpone loans made to the companies in the hardest-hit industries, for instance, tourism, accommodation and catering, wholesale and retail, transportation, logistics and warehousing, culture and entertainment, convention and exhibition, and the companies who have developmental prospects but face temporary liquidity squeeze.

Targeted policies will be adopted for hugely-impacted companies whose loans are due in the near future. Banking institutions are encouraged to initiate negotiations with clients about concrete repayment approach and schedule, make early arrangements for loan renewal and try best to renew loans that ought to be renewed by renewing loans without the repayment of principal and using annual review system.

Banking institutions in Shanghai are encouraged to proactively renew loans for clients whose loans are due before June 30th of 2020 but unable to repay as scheduled due to the impact of the epidemic. The extension will be no more than 1 year.