City unveils measures to reduce the financial burden of businesses

Shanghai launched 21 measures to boost confidence of business entities and promote economic recovery by easing financial burden for enterprises.

It has ramped up efforts to offer support through tax reductions, lower labor costs, and improved access to financing, especially for small and medium-sized enterprises, according to a press conference on Friday.

"Reducing the burden on enterprises is a major initiative of macro policy to support economic growth and employment," said Chen Shiyan, deputy director of the Shanghai Development and Reform Commission.

A total of 21 initiatives in five areas have been implemented this year, including tax reductions and exemptions, labor cost reductions, energy cost reductions, financing support and regulatory flexibility.

Tax Reductions and Exemptions

Measures include value-added tax (VAT) refunds, additional VAT deductions for advanced manufacturing, and increased pre-tax deductions for R&D expenses.

Small-scale VAT taxpayers, micro-profit enterprises, and individual businesses will benefit from a 50-percent reduction in six taxes and two fees, including resource tax, urban maintenance and construction tax, as well as property tax.

Additionally, companies aligned with Shanghai's industrial development direction may receive property tax relief.

Labor Cost Reductions

Starting March, the government will reduce the employer contribution rate for employee medical insurance by 1 percent and the unemployment insurance rate by 0.5 percent.

A new policy will provide social insurance subsidies for employers offering maternity and parental leave, covering 50 percent of the social insurance costs during these periods.

Energy Cost Reductions

Efforts to lower energy costs include reducing electricity prices for industrial parks, encouraging power generation companies to offer lower prices, and maintaining discounted electricity rates during holidays and weekends.

The Shanghai Gas Company will eliminate a 5-percent price surcharge for certain users and remove a transportation fee for chemical zones.

Non-residential users will continue to be exempt from excess water usage fees.

Financing Support

Credit support for SMEs, particularly in the technology sector will be increased, with loan guarantee programs expanded, and interest subsidies provided for SME loans.

The "seamless loan renewal" mechanism will also be extended to all small businesses and medium-sized enterprises with loans maturing before September 30, 2027.

Regulatory Flexibility

The government will also promote grassroots law enforcement to apply reduced or waived penalties more effectively, creating a more lenient regulatory environment.

The measures will be implemented until December 31.