COVID-19 Legal Series (6): How are Employer's Social Insurance Contributions Reduced Under COVID-19
April 02, 2020 | BY
Susan MokLiu Yuxiang and Wu Qiong of Haiwen & Partners summarize the national and local policies introduced to support businesses and employers in China to help alleviate the economic impact caused by the coronavirus outbreak.
|In addition to preferential tax policies, China has further announced a series of policies that reduce the social insurance burden of employers
In order to cushion the economic impact caused by the outbreak of the novel coronavirus 2019 (COVID-19), a series of policies have been issued at both national and local levels in China to support businesses and employers. In addition to preferential tax policies, China has further announced a series of policies that reduce the social insurance burden of employers.
The key national-wide policies expected to effectively reduce or exempt employers' contribution to social insurance and also defer temporarily social insurance payments are:
(1) Circular on Reducing/Exempting Enterprise Social Insurance Premiums for a Period of Time (关于阶段性减免企业社会保险费的通知) (Circular [2020] No. 11 of MHRSS, "Circular No. 11") jointly issued by the Ministry of Human Resources and Social Security (MHRSS), Ministry of Finance (MOF) and State Administration of Taxation (SAT) on Feb. 20, 2020, which covers pension, unemployment insurance and work-related injury insurance; and
(2) Guiding Opinions on Reducing Employee Basic Medical Insurance Premiums for a Period of Time (关于阶段性减征职工基本医疗保险费的指导意见) (Circular [2020] No. 6 of NHSA, "Circular No. 6") jointly issued by the National Healthcare Security Administration (NHSA), MOF and SAT on Feb. 21, 2020, which covers medical insurance.
The two policies are effective from Feb. 1, 2020.
Summary of National Policies
The maximum benefits that provincial governments are authorized to provide under Circular No. 11 and Circular No. 6 are summarized below:
|| Location of Enterprise | Pension, Unemployment, Work-Related Injury Insurance | Medical Insurance | Deferred Payment |
| Enterprise in Hubei Province | Exempted for ≤ 5 months | 50% contribution ≤ 5 months | Deferred Period ≤ 6 months |
| Enterprise outside Hubei Province | Small & Medium Enterprise: Exempted for ≤ 5 months | ||
| Large Enterprise: 50% contribution ≤ 3 months |
A "small and medium enterprise" (SME) will be identified and determined by provincial governments according to the Circular on Issuance of the Provisions on Classification Standards for SMEs (关于印发中小企业划型标准规定的通知) jointly issued by the Ministry of Industry and Information Technology (MIIT), National Bureau of Statistics of China, National Development and Reform Commission and MOF in 2011 (Circular [2011] No. 300 of MIIT).
|… the central government has authorized provincial governments to subsequently issue detailed implementing rules and determine specific policies
Summary of the Local Policies
As with all new policies, the central government has authorized provincial governments to subsequently issue detailed implementing rules and determine specific policies. A summary of local policies relating to social insurance reductions released in Beijing, Shanghai and Guangdong Province are provided below:
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