Three Departments Clarify Several Tax Policies for Enterprises Transformed from Profit-oriented Cultural Public Institutions

Three departments, including the Ministry of Finance ("MOF"), have recently issued the Circular on Renewing Several Tax Policies for Enterprises Transformed from For-profit Cultural Public Institutions under the Cultural System Reform (the "Circular") which remains valid from January 1, 2019 till December 31, 2023.

The Circular reads that where a for-profit cultural public institution institutionally transforms itself into an enterprise, the enterprise will be exempt from enterprise income tax for five years from the date when the system transformation is registered, adding that an enterprise that has completed the system transformation before December 31, 2018 may continue to enjoy the five-year enterprise income tax exemption from January 1, 2019. Meanwhile, the Circular expressly states that, where a cultural entity receiving funds allocated by the department of finance for the cause of culture, transforms itself into an enterprise, the real estate used by the enterprise itself will be exempt from real estate tax in upcoming five years from the date when the system transformation is registered. An enterprise that has completed the system transformation before December 31, 2018 may continue to enjoy the five-year real estate tax exemption for the real property for self-use purpose from January 1, 2019. Furthermore, the Circular notes that, where a cultural enterprise is established with business assets divested from a party newspaper or magazine publisher for the issue and printing business, its income derived from issuing and printing the party newspaper or magazine may be exempt from value-added tax from the date of registration.



(Source: http://szs.mof.gov.cn/zhengwuxinxi/zhengcefabu/201902/t20190226_3178709.html)

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