Personal information violations can be severe, namely, the Criminal Law of the People’s Republic of China elevates the illegal sale or provision of citizen’s personal information to another to a criminal offense. Under Article 253 of the Criminal Law, individual violators face a maximum 3-year imprisonment term for serious violations and under exceptionally serious circumstances, an imprisonment term of 3-7 years. Equally, if the company commits the criminal offence, any directly liable officers or other directly liable individuals of the company shall be convicted and subject to the relevant criminal penalties. Therefore, companies should implement strict measures to regulate the use and disclosure of personal information.

In the below, we summarise the main do’s and don’ts of using and disclosing for companies handling the personal information of individuals located in China.

Do disclose personal information only when necessary and accordingly to law or within justifiable reasons

Article 1034 of the Civil Code defines personal information as the following:

Personal information refers to any information electronically or otherwise recorded that can be used, either alone or in combination with other information, to identify a specific natural person, including the name, date of birth, identification document number, biometric information, address, telephone number, email address, health information or whereabouts of the natural person. 

Under Specification, personal information shall only be disclosed under the following conditions:

• When a security impact assessment is conducted
• When consent is obtained
• When record-keeping and retention obligations are performed
• When stating restrictions during information disclosure

Do clearly state the nature of the disclose and obtain consent

Companies processing personal information are referred as the processors and obliged to obtain consent and disclose the use of the professional information under PIPL.

Specifically, processors shall inform the individual of the following matters in a visible, clear, and easy-to-understand language, truthful, accurate and complete manner.

• The organizational or personal name and contact information of the personal information processor;
• The purpose and method of processing personal information, the type of personal information to be processed and its retention period;
• The way and procedure for the individual to exercise his/her rights provided for by this Law; and
• Any other matter to be informed as required by law or administrative regulations.

Any changes to the above shall be informed to the individual and such individual shall be able to withdraw consent. In a withdrawal, processors shall halt the collection or promptly delete the collected personal information.

Equally, PIPL prescribes the following circumstances in which individual consent is not required for disclosure.

• Where it is necessary for the conclusion or performance of a contract to which the individual is a contracting party, or where it is necessary for carrying out human resources management under an employment policy legally established or a collective contract legally concluded;
• Where it is necessary for performing a statutory responsibility or statutory obligation;
• Where it is necessary for responding to a public health emergency, or for protecting the life, health or property safety of a natural person in the case of an emergency;
• Where the personal information is processed within a reasonable scope to carry out any news reporting, supervision by public opinions or any other activity for public interest purposes;
• Where the personal information, which has already been disclosed by the individual or otherwise legally disclosed.

Don’t neglect additional processing measures for sensitive personal information

For sensitive personal information, companies are required to protect such data, obtain specific consent for disclosure and inform the individual of the necessity and the impact on their rights and interests. Sensitive personal information refers to the following:

• Religious beliefs;
• Bio-metrics;
• Specific identities, medical and health;
• Financial accounts, whereabouts and other information of a natural person;
• Personal information of minors under the age of fourteen

Though the following personal information are forbidden to be disclosed

• Personal bio-metric information
• Genetic, disease and other personal physiological information
• Analysis results of the racial or ethnic identity, political opinions, religious beliefs or other sensitive personal data of Chinese citizens

Do adopt stringent control measures

The Guides requires companies processing personal information to establish administrative control system to prevent unauthorised disclosure such as leakage or tampering. Control systems should be implemented, audited and improved continuously to reduce risks and indirect violations. Additionally, the following technical control shall be implemented for robust controls.

• Establishing password and/or verification to protect the integrity and confidentiality of personal information.
• Adopting measures to detect, prevent, and combat threats against the systems processing personal information.
• Employing an authentication system to verifying the identity of users who have access to the personal information processing systems; implement and audit access control; and prevent and detect intrusions of malicious code and malware.
• Establishing data security in the authentication, access control, and audit; ensure data integrity, confidentiality, availability, and sanitation.

Don’t neglect legal liabilities  

The Specification is often serves as a guide for enforcers to regulate personal information disclosure. Companies failing to comply with the relevant rules and regulations can result in administrative and criminal liabilities.

Administrative liabilities

Those processing personal information in violation of this PIPL or failing to perform any obligation of personal information protection specified in PIPL in the processing of personal information will be ordered to make a correction, given a warning, and confiscated of any illegal gain. Any illegal activities shall be entered into credit files and be disclosed to the public.

Civil liabilities

Personal information infringement under the Cyber Security Law shall be ordered to make corrections and may be subject to following penalties either alone or in combination depending on the circumstances. Penalties include a warning, confiscation of illegal gains, and a fine between twice and ten times the illegal gains or a fine up to CNY 1,000,000 if there are no illegal gains on the organisation, as well as a fine between CNY 10,000 and CNY 100,000 on any directly liable officers or other directly liable individuals of the organisation.

In serious circumstances, the organisation may be ordered to suspend the relevant operation, suspend business for rectification, shut down its website or have its relevant business permit or business licence revoked.

Criminal liabilities

Under Article 253 of the Criminal Law, individual violators face a maximum 3-year imprisonment term for serious violations and under exceptionally serious circumstances, an imprisonment term of 3-7 years. Equally, if the company commits the criminal offence, any directly liable officers or other directly liable individuals of the company shall be convicted and subject to the relevant criminal penalties.

Conclusion

Enterprises using and disclosing data should adjust and adopt work practices accordingly to legal obligations. Understanding and monitoring the changes in new regulations is essential in navigating compliance commitments. At Horizons, we have been developing data compliance frameworks for large to medium-sized companies in China.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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• Provisional Regulations on Enterprise Information Disclosure (“Provisional Regulations”), effective from 1 October 2014

• Interim measures for administration of List of Enterprise with Abnormal Operations (“Interim Measures”) effective from 1 October 2014

• Administrative Measures for Market Regulation of the Seriously Illegal and Dishonest Entities List (“Administrative Measures for Dishonest Entities List”), effective from 1 September 2021

• Administrative Measures for Market Regulation of Credit Restoration (“Administrative Measures for Credit Restoration”), effective from 1 September 2021

The Provisional Regulations requires enterprises to submit the annual report for the previous year between the 1st January to 30^th June, and publicly disclose such information. The information submitted and disclosed shall include the address and contact number of the company, operation status of the company (open, closed or liquidated), investment or shares purchasing related information, capital contribution, contribution date and form of contribution by the company’s shareholder, number of employees, total assets, total liabilities, operating income, main business income, total profits, total tax paid, and so forth.

Enterprises who do not submit the annual report on time shall be listed as Enterprise with Abnormal Operations, as stipulated in the Interim Measures.

Also, enterprises will be listed as Enterprise with Abnormal Operations in the following cases:

• Failing to disclose information upon alteration as according to Article 10 of the Provisional Regulations, and failing rectify the violation on time after being notified by the administrative management department

• Concealing the real situation or practicing fraud when disclosing enterprise information

• Failing to contact enterprise at the registered address (site of business operation)

If an enterprise is listed as an Enterprise with Abnormal Operations and rectifies such violations on time, may apply to be removed. Specifically, the Interim Measures, provision the specific rectifications:

• Enterprises who fail to submit the annual report on time may apply to be removed upon submitting and publishing the annual report.

• Enterprises who fail to disclose information after alteration on time shall publish the altered information. Then apply to regain its normal operation status record at the administration of industry and commerce.

• Enterprises who could not be contacted at its registered address, may regain its normal operation status record after conducting the regular procedures for alteration of registered address or business operation site, or claimed that the Enterprise can contacted at its registered address.

From the listed date, enterprises listed as Enterprises with Abnormal Operations and exceeding three years will be listed as “seriously illegal and dishonest enterprises”. As “seriously illegal and dishonest enterprises”, enterprises will face severe negative image and reputation.

Therefore, enterprises should take corrective actions promptly when listed as “enterprises with abnormal operations”, and apply to be removed at the competent administration of industry and commerce as according to the aforesaid procedures.

Dishonest Entities List

The Administrative Measures for Dishonest Entities List, defines the Dishonest List as companies that:

• seriously endanger people’s health and life safety,
• seriously destroy the fair market competition order and normal social order,
• refuse to perform legal obligations,
• seriously affect the credibility of administrative organs and companies with other serious illegal and dishonest behaviors.

Generally, enterprises in industries directly related to the people’s life, health and safety are affected including food, drugs, special equipment, and other related sectors.

Similar to the “Enterprise with abnormal operations list”, enterprises, listed as “illegal and dishonest enterprise” for more than one year, may request to be removed at the competent Market Supervision Administration. Specifically, the Administrative Measures for Credit Restoration stipulates the below preconditions:

• The enterprise has fulfilled the obligations provided in the administrative penalty
• The enterprise has proactively rectified the negative impacts and consequences
• The enterprise is no-longer subject to further serious administrative sanctions provisioned by the relevant administrative departments

Removal from the “abnormal operations list” or “illegal and dishonest enterprises list” will not delete the historical record of enterprises being listed. Rather such records are held on the company’s credit file and publicly disclosed.

Therefore, understanding and comply with the Chinese laws and regulations is essential to enterprises’ operations and entire life-circle. Any irregularities detected by the competent authorities will be an irreversible record for the company.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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For employers, understanding salary obligations for employees in quarantine or lockdown can be challenging. Employers must adhere to labour obligations according to the law otherwise may face labour disputes. We provide a Q&A on employer obligations when employees are quarantined or lockdown.

What is the salary obligation for quarantined employees?

Quarantined employees providing  normal work in quarantine or under other emergency measures taken by the government based on  epidemic prevention and control shall be treated as normal attendance and paid normal remuneration.

According to the notice on properly handling the labor relations during the prevention and control of pneumonia infected by novel coronavirus (the “Notice”) issued by the general office of the Ministry of human resources and social security, infected or suspected employees  suspected employees deemed as close contact and cannot provide normal work during quarantine or medical observation, or due to the implementation of isolation measures or other emergency measures by the government, shall be treated as  normal attendance and paid normal renumeration.

For employers, the Notice suggests that employers negotiate with the employee to treated the period as annual leave or rest days. If negotiations are not established, the employer can implement the overall arrangements according to the annual leave of the isolated employees according to law.

What if my enterprise faces difficulties in production and operation due to the impact of the epidemic measures?

Under the Notice, the enterprise may adjust the salary, rotate the post and rest, shorten the working hours and so forth through consultation with the employees.

If the enterprise is shutdown within a wage payment cycle, the enterprise shall still pay the wages of employees according to the standards stipulated in the labor contract.

If the employee is still unable to provide normal work beyond one wage payment cycle, the enterprise shall pay living expenses, and the standard of living expenses shall be implemented in accordance with the measures of the provinces, autonomous regions and municipalities directly under the central government.

What if employee’s labour contract expires during quarantine?

In the event that the employee’s labor contract expires during quarantine, the date shall be postponed till the  employee finishes the quarantine or medical observation period.

How to determine the arbitration statutory limitation during epidemic measures?

Under, the Labor Dispute Mediation and Arbitration Law of the people’s Republic of China the statutory limitation for application of labour disputes arbitration is limited to one year (‘the period’). The period shall be calculated from the date the parties recognise or should recognise the infringement of rights. However, if the parties are unable to apply for arbitration within the  period due to force majeure or other justified reasons such as epidemic measures, the period shall be suspended and the period shall be recalculated from the date the force majeure or other justified reasons finishes.

Equally, If the labor and personnel dispute arbitration institution cannot hear the case within the period due to the impact of the epidemic measures, the hearing time limit may be postponed accordingly.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

The post Employer Obligations during Quarantine appeared first on China Collaborative Group.

1. What is the salary obligation for quarantined employees?

Quarantined employees providing normal work in quarantine or under other emergency measures taken by the government based on epidemic prevention and control shall be treated as normal attendance and paid normal renumeration.

According to the notice on properly handling the labor relations during the prevention and control of pneumonia infected by novel coronavirus (the “Notice”) issued by the general office of the Ministry of human resources and social security, infected or suspected employees suspected employees deemed as close contact and cannot provide normal work during quarantine or medical observation, or due to the implementation of isolation measures or other emergency measures by the government, shall be treated as normal attendance and paid normal renumeration.

For employers, the Notice suggests that employers negotiate with the employee to treated the period as annual leave or rest days. If negotiations are not established, the employer can implement the overall arrangements according to the annual leave of the isolated employees according to law.

2. What if my enterprise faces difficulties in production and operation due to the impact of the epidemic measures?

Under the Notice, the enterprise may adjust the salary, rotate the post and rest, shorten the working hours and so forth through consultation with the employees.

If the enterprise is shutdown within a wage payment cycle, the enterprise shall still pay the wages of employees according to the standards stipulated in the labor contract.

If the employee is still unable to provide normal work beyond one wage payment cycle, the enterprise shall pay living expenses, and the standard of living expenses shall be implemented in accordance with the measures of the provinces, autonomous regions and municipalities directly under the central government.

3. What if employee’s labour contract expires during quarantine?

In the event that the employee’s labor contract expires during quarantine, the date shall be postponed till the employee finishes the quarantine or medical observation period.

4. How to determine the arbitration statutory limitation during epidemic measures?

Under, the Labor Dispute Mediation and Arbitration Law of the people’s Republic of China the statutory limitation for application of labour disputes arbitration is limited to one year (‘the period’). The period shall be calculated from the date the parties recognise or should recognise the infringement of rights. However, if the parties are unable to apply for arbitration within the period due to force majeure or other justified reasons such as epidemic measures, the period shall be suspended and the period shall be recalculated from the date the force majeure or other justified reasons finishes.Equally, If the labor and personnel dispute arbitration institution cannot hear the case within the period due to the impact of the epidemic measures, the hearing time limit may be postponed accordingly.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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What is force majeure?

A force majeure clause exempts one or both parties from liability or obligation since an extraordinary event, such as war, strike, crime, or “Act of God” prevents one or more parties from fulfilling their obligations under the signed contract. Epidemic measures enacted to contain COVID-19 (such as lockdown) which directly restricts companies from performing contractual obligations may constitute as a force majeure, since the original terms can no-longer be performed. For instance, as the citywide lockdown in Shanghai continues, manufacturers unable to resume work cannot fulfil their contractual obligations, and such manufacturers may invoke the force majeure clause.

Invoking force majeure during or after lockdown

The legal basis for force majeure is provisioned under The Civil Code of the People’s Republic of China

Articles 180, 563 and 590.

Article 180
A person who is unable to perform his civil-law obligations due to force majeure bears no civil liability, unless otherwise provided by law. “Force majeure” means objective conditions which are unforeseeable, unavoidable, and insurmountable

Article 563
The parties may rescind the contract under any of the following circumstances:
(1) the purpose of a contract is not able to be achieved due to force majeure;

Article 590
Where a party is unable to perform the contract due to force majeure, he shall be exempted from liability in whole or in part according to the impact of the force majeure, unless otherwise provided by law. The party unable to perform the contract due to force majeure shall promptly notify the other party to mitigate the losses that may be caused to the other party, and shall provide proof of the force majeure within a reasonable period of time. Where the force majeure occurs after a party’s delay in performance, such party’s default liability shall not be exempted

Under such provisions, companies invoking force majeure are not wholly exempted from contractual obligations. Rather companies are required to prove that the lockdown measures directly impacted their contractual terms. For example, a manufacturer could not deliver the goods as agreed within the contract since the factory was lockdown and manufacturing could not continue, therefore, the manufacturer could be exempted from such obligation and breach of contractual term.

In conclusion, affected companies can be exempted from for the breach of contract in part or in whole according to the influence of the force majeure – such as an epidemic measure.

Terminating contracts under force majeure

Contracts can only be terminated if the fundamental purpose of the contract cannot be achieved due to force majeure. Namely, where the contract cannot be performed or cannot be performed in accordance with the agreed terms defined in the contract.

The Circular of the Supreme People’s Court on Issuing the Guiding Opinions (II) on Several Issues concerning the Proper Trial of Civil Cases Related to the COVID-19 Epidemic According to the Law (“the guiding opinions of the Supreme Court (II)) provides further guidance on contract termination.

If the epidemic situation or epidemic prevention and control measures cause the parties to fail to perform the sales contract within the agreed time limit or the performance cost will be increased, and the continued performance does not affect the realization of the purpose of the contract, if either party request to terminate the contract, the people’s court will not support.

Under such example, though the continued performance of the contract has been adversely affected by the epidemic measures, the force majeure does affect the purpose of the contract. Hence, the contract cannot be terminated.  Instead, both parties to the contract shall still perform their contractual obligations in accordance with the agreement in accordance with the principle of good faith.

The affected party in such instance may apply the change of circumstance to renegotiate the contractual terms, if the epidemic situation or epidemic prevention and control measures significantly increased the performance costs of labor, raw materials and logistics, or significantly reduced the price of products.

Change of circumstances

The Civil Code of the People’s Republic of China revised in 2020 includes epidemic within the provisions in change of circumstances. Specifically, parties to a contract adversely affected by the epidemic may renegotiate the conditions for the performance of the contract. If the negotiation fails within a reasonable period of time, each party may request the people’s court or arbitration institution to change or terminate the contract.

The Civil Code stipulates parties to renegotiate new terms in the first instance and continue to perform according to the negotiated terms. However, if the negotiation fails each party may request the people’s court or arbitration institution to change or terminate the contract by applying to the principle of fairness.

Where the people’s court or arbitration institution decides to change the contract, the party shall continue to perform the contract according to the changed conditions based on the agreement of the parties or the effective judgment document.

Case Study

Epidemic prevention and control measures directly restricted the delivery of  goods within the agreed time limit defined in the contract. Parties failed to negotiate new terms and the seller requested the people’s court to change the conditions of performance time limit. The people’s court changed the performance time limit according to the principle of fairness in combination with the actual situation of the case.

Consequently, companies should note that invoking force majeure clause for lockdown measures can be complex, which requires proof of the force majeure directly impacting the contractual obligation. Under certain circumstances, the party is exempted from the breach of contract, but the performance of the contract shall continue. Terminating contracts under force majeure should demonstrate the purpose of the contract is affected by the force majeure, otherwise the people’s court may not support such case. Alternatively, companies may utilise the change of circumstances provisions to renegotiate more suitable terms or apply to the people’s court to change or terminate the contract.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

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Lowered percentages

Effective from the 27 March till the 31 December 2022, the percentage related to two types of social security have been lowered.

The post Recent social security insurance policies in Shanghai appeared first on China Collaborative Group.

Personal Information Protection Law (‘PIPL’), effective from 1 November 2021, regulates those collecting and handling personal information. For companies processing employee data, a robust data security system should be integrated into the IT infrastructure and in line with PIPL.

Whilst PIPL largely affects companies handling consumer data, employers are not immune from PIPL and should be fully compliant to mitigate risks. Specifically, the Civil Code of the People’s Republic of China amended in 2020 defines personal information as the below.

‘Personal information refers to any information electronically or otherwise recorded that can be used, either alone or in combination with other information, to identify a specific natural person, including the name, date of birth, identification document number, bio-metric information, address, telephone number, email address, health information or whereabouts of the natural person.’ (Article 1032)

Therefore, employers should strengthen internal employee data management systems to secure employees’ data. At Horizons, we have been advising companies in formulating compliance mechanisms. In the below, we outline the main dos and don’ts of processing employee data from our experience.

Do implement a classification management

Companies should review the existing personal information of employees and classify the information according to the level of sensitivity. Under PIPL, employers are not required to obtain employees’ consent where it is necessary for carrying out human resources management under an employment policy legally established or collective legally concluded (Art. 13). However, separate consent is required for the handling of information that is not included in employment policies or labour contracts. Namely, companies processing sensitive information that is not included in human resources management (including religious beliefs, biometrics, specific identities, medical and health and financial accounts, whereabouts, and other information of a natural person) will need to obtain a separate consent and sensitive personal information are subject to stricter measures.

We suggest companies utilise a classification system on the personal information held and establish robust policies to process the data according to PIPL.

Don’t overlook technical security measures

Companies should have already established cyber security measures under the Cyber Security Law (‘CSL’) effective from 2017. Specifically, the network system should be protected from cyber-attacks and leakage. Regularly reviewing the IT system and updating equipment and software are essential for companies to be safeguarded from new forms of cyber-attacks.

Equally, contracting the processing of personal information to third parties can be vulnerable areas. We advise companies to review related contracts/agreements to ensure third parties do not infringe on personal privacy rights. If necessary, clauses should be redrawn to comply with PIPL and CSL.

Do assess control and schedule regular training

Where necessary, companies may only transfer personal information outside of mainland China by meeting one of the conditions in Article 38 of PIPL.

• Where a security assessment organized by the national cyberspace authority has been passed under
• Article 40 of this Law;
• Where certification of personal information protection has been given by a professional institution in accordance
• with the regulations of the national cyberspace authority;
• Where a contract in compliance with the standard contract provided by the national cyberspace authority has
• been concluded with the overseas recipient, establishing the rights and obligations of both parties; or
• Where any other condition prescribed by law, administrative regulations, or the national cyberspace authority is
• met.
• Where there is any stipulation on the condition or any other stipulation for the provision of personal information to a recipient outside the territory of the People’s Republic of China in any international treaty or agreement concluded or
• acceded to by the People’s Republic of China, such stipulation may apply.

Though the national cyberspace authority has not issued the aforementioned materials yet, companies must draft a control mechanism and regular training for related personnel-in-charge to ensure international data transfer complies with PIPL and forthcoming regulations.

Don’t neglect incidents emergency response plan

The amended Civil Code addresses the protection of personal information and the right to privacy. Privacy is defined under the Civil Code as the following:

The private life of a natural person is not to be intruded upon, as well as any private space, private activity, or private information of the natural person that he or she does not want to be known by others. [And] no organization or individual may, by means of spying, intrusion, exposure, disclosure, or otherwise, infringe upon another’s right to privacy. (Article 1032)

In other words, employers must protect the employee’s personal information and their right to privacy when handling employees’ data. As a result, companies should not neglect to implement an incident emergency response plan to demonstrate their commitment to protecting personal information. The company may utilise the emergency response plan provisions under CSL as guidelines.

Both the amended Civil Code and PIPL call for employers to strictly regulate the handling of employees’ personal information. Specifically, a comprehensive internal governance system should be established to migrate penalties. Failure to perform obligations under the PIPL can be subject to a fine of CNY 1 million on the violator and any person in charge or another individual directly involved will face fines between CNY 100,000 and CNY 1 million, as well as be suspended from serving as director, supervisor, senior officer, or personal information protection officer of an enterprise for a period of time.

Consequently, severe penalties require employers to act immediately and understand PIPL obligations seriously.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

The post The Dos and Don’ts of Processing Employee Data under Personal Information Protection Law in China appeared first on China Collaborative Group.

Q: I am unable to submit my document for my residence permit renewal due to my compound lockdown, can I submit online?

A: Applications for residence permit require documents to be submitted to the relevant exit and entrance bureau. In the case, the applicant was unable to submit due to lockdown, a certification of the compound should be obtained. However, applicants do not automatically receive an extension period during lockdown.

Q: If I am unable to renew my residence permits before the expiry date, will I face penalties?

A: Residence permits can be renewed three-months in advance; therefore, the lockdown period does not automatically exclude any fines or administrative penalties for overstays. Each circumstance would be evaluated individually by the relevant authorities. Even though, offenders may not be fined, a written record may be noted which could impact future applications.

Q: My residence period expires at the end of May, when should I renew it?

A: We recommend leaving ample time to renew residence permits. Thus, renewal should be conducted at the earliest three-months in advance to migrate risks arising from extraordinary circumstances.

The post Renewing your residence permit or visas during Shanghai lockdown appeared first on China Collaborative Group.

We highlight the practical elements for enterprises to note when implementing the resumption of work.

1. Closed-loop management

Enterprise should implement a closed-loop pandemic control mechanism that is acknowledged by the authorities. Namely, a closed-loop refers to area zoning and category-based management for different areas to prevent physical contact between different groups of employees such as in production, common areas, or meeting rooms, as well as establishing no-contact with external individuals such as logistic suppliers (external individuals must hold a negative nucleic acid test certificate within 48 hours and on-site negative antigen test results). As result, employers should ensure the employees are segregated into groups, establish the work environment to permit one metre social distancing within the workplace, and restrict or limit physical contact between such groups to isolate positive cases to one group and prevent cluster outbreaks.

2. Emergency response plan

Enterprises shall formulate emergency response plans for COVID-19 outbreaks in the workplace. Any employees with abnormal antigen detection and nucleic acid detection should be reported to the official in charge and the Centre for Disease Control and Prevention. Transportation and treatment of those diagnosed with COVID-19 should be priorly established with the local government and temporary isolation measures should be implemented for close-contact staff. Large enterprise shall set up a shelter in the factory area.

3. Stock of Anti-Pandemic Materials

Enterprises should maintain a stock of anti-pandemic materials and purchase antigen self-test kits, face masks, alcohol-based disinfectants, hand sanitizers, infrared thermo-detectors, thermal imaging detectors, protective suits, goggles, disposable gloves, etc. whenever necessary. A minimum supply of anti-pandemic materials for 14 days is recommended. All used protective items shall be disposed properly and safely.

The Guideline also adds that enterprises should resume work and production under the guidance of district governments on a “one-on-one” basis. We suggest that enterprises consult with professionals to ensure the resumption of work is compliant with the local guidelines and district government.

This content appears as a courtesy of Horizons Corporate Advisory, a proud member of the China Collaborative Group (CCG Association). It is informational in nature and does not constitute legal advice or establish an attorney-client relationship between you and its author, publisher or any member of CCG. For more information, please visit www.horizons-advisory.com. 

The post Resuming work for industrial enterprises in Shanghai? appeared first on China Collaborative Group.

Corporate income tax

The corporate income tax rate was reduced from 10 percent to 5 percent for small and micro-businesses. The tax rate is applied to the profit portion from 1 million RMB to 3 million RMB.

Reduction and exemption of six taxes and two fees

Six taxes and two fees for small and micro enterprises and individual businesses will be reduced within 50% of the tax amount (taxes include resource tax, urban maintenance, and construction tax, real estate tax, urban land use tax, stamp duty excluding stamp duty on securities transactions, arable land occupation tax and education fee surcharge, and local education surcharge within 50% of the tax amount)

The percentage rate will be implemented by the local provincial or municipal government; therefore the rate may vary.

Eligibility

Small and micro enterprises are defined as the following:

• Engaged in industries not restricted or prohibited by the State
• Annual taxable income does not exceed 3 million RMB
• The number of employees does not exceed 300
• Total assets do not exceed 50 million RMB

Refund of incremental VAT credits

From the tax filing period of April 2022, refund of incremental VAT credits is extended to micro and small enterprises, and individual-owned businesses. Such enterprises are also granted a lump sum refund of existing tax credits.

Eligibility

Such enterprises shall meet the following conditions to apply for a refund.

Tax credit rating is A or B;

Has not obtained any VAT credit refund or export tax refund in a fraudulent manner or falsely issued any VAT invoice in the 36 months before the application for the tax refund;

Has not been subjected to penalties on two or more occasions by a tax authority for tax evasion in the 36 months before the application for tax refund; and

Has not benefited under the policy of “immediate refund upon payment” or “return/refund after payment” of excess VAT since April 1, 2019.

Small-scale VAT taxpayers

Small-scale VAT taxpayers subject to 3% VAT on sales revenue will be exempted from VAT from 1 April to 31 December 2022.

Eligibility

Small-scale VAT taxpayers are taxpayers engaged in producing goods or providing services with an annual VAT taxable revenue not exceeding 5 million RMB.

The post Latest tax policies to support businesses during the COVID-19 outbreak appeared first on China Collaborative Group.