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2021 China tax planning: Incentives exit and tax filing calendar

February 2, 2021 / 4 min read

Is your organization up to date on current incentives for tax planning in 2021? Review our tax filing calendar and update on incentive policies to prepare for 2021 Chinese tax planning.

In 2020, the Chinese government released a series of tax incentive policies to support businesses during the COVID-19 pandemic. (Refer to China and COVID-19 incentives: What businesses need to know). However, as 2021 begins, some of these incentives have now expired while the rest will remain effective throughout this year. It’s imperative for companies to be aware and prepared for these policy changes to help them with their tax planning. Below are key updates and deadlines related to tax filings and incentives for 2021.

Value-added tax (VAT)

Until Dec. 31, 2020, general taxpayers with cumulative 12 months’ sales under RMB 5 million could apply to switch to small-sized taxpayer option in order to enjoy lower VAT rates. Effective Jan. 1, 2021, general taxpayers will no longer be able to switch to the small-size taxpayer option.

Effective incentives:

Corporate income tax (CIT)

Businesses in industries that have been negatively impacted by the pandemic could extend their loss carryforward period from five years to eight for losses incurred in 2020. These industries include restaurants and catering services, transportation, film, tourism, and hospitality. Effective Jan. 1, 2021, the loss carryforward period for these industries has been restored to five years only. Small-sized low-profit businesses can now enjoy deferred CIT payments. Businesses that enjoyed CIT payment deferrals in 2020 need to ensure timely payment in the tax filing period due on Jan. 20, 2021.

Effective incentives:

Export-related policy

In 2020, the STA and China Customs and Ministry of Finance issued a joint announcement on tariff and tax exemption of export goods returned due to the COVID-19 pandemic. For the goods declared for export between Jan. 1, to Dec. 31, 2020, which are to be shipped back to China intact within one year of export due to force majeure caused by the pandemic, the government will exempt import duty tax, import VAT, and consumption tax. Any duties and taxes levied at the time of export will be returned to the company. The tariff exemption policy is still valid for export goods shipped out in 2020 and returned to China in 2021 that falls into the one-year time frame.

Social security contribution

In 2020, the nationwide reduction or exemption of social security payments helped businesses to save on labor-related costs. Effective Jan. 1, 2021, these incentives expire in most provinces and cities, with the exception of a few regions:

To learn more about specific policies applicable to your organization, please contact our China tax team.

2021 tax filing deadlines

According to the STA announcement No. 242 for adjusted deadlines for tax filing in 2021, the regular monthly tax filing deadlines, which is the 15th of each month, will be adjusted in certain months based on the statutory public holidays in 2021. Businesses should keep a close eye on the adjusted schedules to avoid missing the tax filing deadlines.

Here’s a detailed list of the monthly tax filing deadlines in 2021:

Under special circumstances, regional tax bureaus may adjust the local tax filing deadlines after getting approval of the STA. Please feel free to contact our China tax team to learn about the regional tax filing schedules in 2021.

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