The outbreak of the coronavirus (COVID-19) pandemic in China was marked by the shutdown of Wuhan City on 23 January 2020. After 76 days, Wuhan’s shutdown ended and China achieved success in the first stage of dealing with the crisis - safeguarding people’s livelihood by preventing and controlling the spread of the virus. (The second stage relates to encouraging economic recovery and boosting economic activities.) During the pandemic, China launched a series of fiscal measures to support the control of COVID-19 and promote the recovery of the economy. As the country that first achieved some success in dealing with the global crisis, China’s fiscal measures are worthy of review.
2. Overview of China’s Fiscal Measures in Relation to the COVID-19 Pandemic
2.1 Fiscal measures
China’s fiscal measures relating to the COVID-19 pandemic take the form of tax incentives. These measures focus on the following four areas: (1) supporting the containment of COVID-19 on the frontline; (2) supporting supplies to control the pandemic; (3) encouraging public donations to relieve the adverse effects of the pandemic; and (4) supporting the resumption of work and production.
2.2. Rapid implementation
The STA has issued immediate implementation policies as a guide to the implementation of all of the tax incentives. The guidance contains detailed implementation rules for the tax incentives. With the stabilization of the pandemic, China’s focus has turned to resuming work and boosting the economy. In this regard, China had originally planned to complete the building of a moderately prosperous society in all aspects during 2020. With the curbing of the COVID-19 pandemic, China still wishes to achieve the goal. Accordingly, the STA initiated the “Spring Breeze Action for Facilitating Taxpayers” in February 2020. This action plan aims to alleviate difficulties of enterprises due to the COVID-19 pandemic, especially those relating to small and low-profit enterprises and to promote their work by way of all forms of fiscal assistances.
In order to inform the public, the STA has employed diverse methods to publicize the policies and implementation rules in a timely manner. First, the STA made all the incentives transparent for taxpayers. It published the measures on its official website, hotlines and the WeChat official account at the time of publication. In order to ensure the delivery of the information to qualified individuals, the STA used tax big data, third-party data and cooperation with tech giants, such as Tencent and telecom companies, to send messages to individuals via WeChat or text messages. Taxpayers’ questions are answered online through online interviews and video demonstrations. In addition, the STA has launched an online question and answer (Q&A) database that helps to answer taxpayers’ questions during the pandemic. Moreover, tax officials and academics have been invited to analyse tax policies by way of live broadcasts, which was rapidly adopted as means for publicizing measures during the pandemic. In order to guarantee that all of the measures can be implemented in place, information technology (IT) support is necessary. The STA has, therefore, upgraded its IT system with more artificial intelligence (AI) to ensure the smooth operation and implementation of all of the measures.
Good supervision contributes to effective implementation. The STA has an internal supervision and evaluation system that monitors the implementation of fiscal measures. This time the STA incorporated the implementation effects of the tax incentives during the pandemic into the performance assessment of tax officials at all tax bureaus. Foreseeably, the strengthening of the responsibilities of tax officials should encourage officials to implement the measures better, thereby benefiting taxpayers.
2.3. Highlight: The non-contact taxpayer service
Since the outbreak of the COVID-19 pandemic, the STA has promoted the non-contact taxpayer service to remove the need for people to gather together. Instead of going to tax bureaus in person, taxpayers can access tax services online via electronic tax bureaus and self-service tax handling terminals. All of these online services are facilitated by high technology and AI.
Specifically, in 2020 over 90% tax payments can be handled online. Taxpayers can also use third-party tax payments via the mobile terminal of electronic tax bureaus. With regard to invoice collection and issuance, taxpayers can benefit from the “online application and mail delivery” service. The STA has also expanded non-contact export refund or exemption services. Taxpayers can submit electronic data and declare tax refund or exemption online and no paper submission is required. The STA only reviews the electronic data. When the review is completed, the declaration is successful. If more materials are needed in the review, the STA contacts the taxpayer to provide image data via WeChat or e-mail. Moreover, when the STA needs an assessment, it organizes telephone and online interviews. The STA is also working with the Chinese online payment clearinghouse, NetsUnion Clearing Corporation (NUCC) to promote the scanning of two-dimensional codes to pay taxes nationwide. Taxpayers can use WeChat or Alipay to scan two-dimensional codes to pay taxes and track the progress of payments. All of these measures not only reduce the risk of virus infection due to people contact, but also make for greater convenience and efficiency for taxpayers. If living with COVID-19 will become a “new normal”, it is foreseeable that the non-contact tax service will expand greatly.
In countering the COVID-19 pandemic, China has reacted rapidly by providing fiscal assistances. It has provided certainty for taxpayers in an uncertain time. In order to ensure that legal certainty can play a role, China must pay attention to the implementation of its tax incentives and place greater focus on the ex-post assessment and supervision of these measures. Finally, the pandemic has presented China with an opportunity to rethink the way in which it applies tax incentives and to introduce greater legal control.
(1) X. Wang, WHO praises China's steps to contain virus, ChinaDaily (24 Jan. 2020), available at www.chinadaily.com.cn/a/202001 /24/WS5e2b0470a31012821727326b.html (accessed 20 Nov. 2020).
(2) D. Cao, Travel resumes as Wuhan lockdown ends, ChinaDaily (8 Apr. 2020), available at www.chinadaily.com.cn/a/202004/08/WS5e8d31d2a310aeaeeed50b24.html (accessed 20 Nov. 2020).
(3) For a comprehensive review of the relevant tax incentives, see www.chinatax.gov.cn/eng/c101269/c5147579/5147579/files/b0d6ac329f674629849c78c8f741b579.pdf (accessed 20 Apr. 2020) on the website of the China’s Guojia shuiwu zongju (State Taxation Administration, STA).
(4) CN: Notice on Tax Collection and Management Policies for Supporting the Prevention and Control of COVID-19, State Administration of Taxation, No. 4 (10 Feb. 2020).
(5) 2020 is the end of the 13th Five-Year Plan in China. China’s first Five-Year Plan started in 1953. The Five-Year Plans aim to provide the prospects for China’s economic and social development in the long run. The primary goal of China’s 13th Five-Year Plan (2016-2020) is to maintain economic growth at a mid to high speed. See Xinhua, Xi Focus: With virus basically curbed, China pushes ahead battle against economic fallout, ChinaDaily (12 Mar. 2020), available at www.chinadaily.com.cn/a/202003/12/WS5e69f9a5a31012821727e979.html (accessed 19 Nov. 2020).
(6) CN: Opinions on the Spring Breeze Action for Facilitating Taxpayers in 2020, Shuizongfa No.11 (27 Feb. 2020).
(7) CN: Enterprises Resume Work and Tax Authorities Send Warmth by “Spring Breeze”, STA (30 Mar. 2020), available at www.chinatax.gov.cn/chinatax/n810341/n2340339/c5147543/content.html (accessed 19 Nov. 2020).
(8) For the STA’s database regarding tax policies and tax Q&A during the COVID-19 pandemic, see www.chinatax.gov.cn/chinatax/c101528/yiqing_zcjwdk1581593914532.html (accessed 19 Nov. 2020).
(9) For instance, see Live broadcasting by Shangxi Liu (President of Chinese Academy of Fiscal Sciences) with Baidu on Understanding Fiscal Policies under COVID-19, 20.00-21.00 (19 Nov. 2020).
(10) See supra n. 8.
(11) See supra n. 10.
(12) CN: STA, STA releases ‘non–contact’ online tax item list and Q&A explanation (12 Feb. 2020), available at www.chinatax.gov.cn/eng/c101269/c5148434/content.html (accessed 19 Nov. 2020).
(13) CN: STA, STA further optimizes ‘non–contact’ export tax refund, exemption services (21 Feb. 2020), available at www.chinatax.gov.cn/eng/c101269/c5148211/content.html (accessed 17 Nov. 2020).
(14) CN: STA, Tax Payments via QR Codes Promoted in China for Epidemic Control (11 Feb. 2020), available at www.chinatax.gov.cn/eng/c101269/c5146827/content.html (accessed 17 Nov. 2020).