What you need to know about rent exemption for small and micro enterprises in China

The recent wave of COVID-19 in China has severely impacted many business operations. With area or city-wide lockdowns and confirmed cases rapidly increasing per day, businesses are facing cash-flow and staff shortage challenges. The State Government has released several policies to support businesses especially small and micro enterprises during this period. Namely, applicable enterprises can be granted rent exemptions of 3-6 months. We have complied a Q&A on the latest rent exemption policy, especially for affected enterprises in Shanghai.

Q: Which type of enterprises are eligible for rent exemptions?

A: Under the Circular on Working Effectively on the Rent Concessions for Small and Micro Enterprises and Individual Businesses in the Service Industry in 2022, small and micro enterprises and individual business in services are eligible for rent exemptions. In Shanghai, the municipal government issued further policies to expand the scope of enterprises and individual businesses to all industries. For those outside of Shanghai, we recommend checking the related local municipal or provincial policies.

Q: Does rent exemptions apply to all properties?

A: Applicable enterprises renting state-owned housing are eligible for rent exemptions. Such enterprises may be exempted from 3 months’ rent. An additional 3 months is allocated to enterprises listed in the medium or high-risk areas or under circumstances that the epidemic prevention measures severely impacted business operations. 

Q: Does rent exemptions apply to enterprises who have recently moved into their property?

A: Enterprises are required to have rented their property for minimum 6 months in the last year. Those eligible for an additional 3 months, enterprises are required to remain in the same property for 2 months afterwards.

For those renting commercial properties, rent exemptions or deductions is at the discretion of the commercial property. Negotiating favorable terms could be utilised to manage cash-flow challenges.

If you have questions or concerns related to managing cash-flow and other related matters, please contact Horizons at +86 21 5356 3400 or talktous@horizons-advisory.com.

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