Lockdown in Shanghai: Quick Financial and Tax Q&A

updated on 27 May 2022 | reading time approx. 3 minutes

Q: How to make tax filing without Certificate Authority (“CA”)?

A：When the responsible personnel has no access to CA, it is possible to use the electronic business license or social credit number to log in, however it needs to be applied by the legal representatives with their registered phone numbers.

Q: Is it possible to apply for electronic special Value Added Tax (VAT) invoice in Shanghai?

A: Although it has been announced that the electronic VAT invoices will be implemented as a Pilot Program from 1 December 2021, only enterprises established after 21 December 2020 and few companies selected by the tax authority are eligible to apply for the electronical special VAT invoice online. Yet, the electronic normal VAT invoice can be applied online by most of the taxpayers.

Q: Has the deadline for tax return filing in Shanghai been postponed?

A: On 25 April, the Shanghai Tax Authority announced to postpone the tax return filing deadline for March and April to 31 May 2022, and further on 27 May announced to postpone the tax return filing deadline for March, April and May to 30 June 2022. On 20 May, the Shanghai Tax Authority announced to postpone the deadline of annual CIT filing 2021 to 30 June, 2022.

Q: Whether the transfer pricing documentation deadline would be postponed?

A: Till now there is no announcement on postponing the annual transfer pricing documentation deadline, which remains as 30 June 2022.

Q: How to deal with financial bookkeeping remotely?

A: Some companies may have installed certain software for remote logging on accounting systems. The efficiency might not be perfect but it at least could solve the monthly closing issues.

Q: Whether there is any lease subsidy and social insurance support for 2022?

A: The lease subsidy application is in progress with certain criteria (lease from state-owned property or certain risks area etc.). However, whether there is any lease subsidy from non-state-owned property, needs to be further checked and confirmed. Till now there is no any update on the reduction of social insurance.

Q: Many taxpayers were requested to submit the application of VAT credit refund, is this a must to apply?

A: Chinese tax authorities are actively implementing the VAT credit refund recently, and companies which are qualified to apply for VAT credit refund, shall submit the application. It aims to support the liquidity of taxpayers, yet taxpayers shall monitor the future business operation in particular the VAT impact and revise the business forecast.

Q: Is there any tax subsidy released by Shanghai tax authority?

A: On 30 March 2022, Shanghai tax authority issued a tax policy guideline. That is by far the official summary of tax subsidy announced by the Shanghai tax authority. For further detailed information use our CFO Quick Check.

Q: Can taxpayers apply for outbound payments during lockdown time?

A: Currently banks are not yet fully functional as usual, and it is suggested to check with the responsible banks for outbound payments, as well as the incoming foreign currency payment settlement. For dividend distribution, it might be difficult to proceed due to the lockdown situation.

Q: Imported goods of taxpayers are stored at Customs without declaration. Would that lead to late payment interest of not being able to declare the import duty and VAT on time?

A: Such a delay of declaration shall be in principle exempted from any late payment interest, however, and we still suggest taxpayers to confirm with the responsible Customs as soon as possible.

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