Recently, four departments, including the Ministry of Finance ("MOF"), have jointly issued the Circular on the Tax Policy for Further Supporting and Promoting Entrepreneurship and Employment of Key Groups (the "Circular") which will be valid between January 1, 2019 and December 31, 2021.
The Circular states that, where an enterprise employs the impoverished population who have been registered under poverty records, and individuals that not only register with the public employment service organ under the authority of human resources and social security for their unemployment which has lasted for more than half a year, but also obtain the Employment and Entrepreneurship Certificate or the Employment and Unemployment Registration Certificate, this enterprise will be entitled to offset in sequence its value-added tax, urban maintenance and construction tax, education surcharge, local education surcharge and enterprise income tax, to the extent of the designated quota and according to the actual number of the employed individuals, provided that it has signed with each of these employed individuals a labor contract with a term of over one year and makes social insurance contributions for them as legally required, adding that such preferential offsetting may start from the very month when the labor contract is signed and social insurance contributions are made and continue for three years. The designated quota is CNY6,000 per person per year and may be adjusted upward by up to 30 percent, and each provincial-level government may determine a specific quota within the said range, in consideration of local realities.