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Tax Exemptions in China for Media and Cultural Industries


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The Chinese government has announced a preferential tax policy spanning five years to help boost the country’s “cultural industries. ”

According to the Ministry of Finance, cultural companies will be qualified for an exemption of value-added tax, business tax or import duties from 2009 to 2013.

Cultural companies are defined as those dealing with the press, publication, broadcasting, film, television, cultural and artistic businesses.

This definition also includes film companies and will qualify them for are exempt from value-added tax and business tax for revenues earned from copy sales, copyrights transfer, distribution and film production in rural areas.

The circular also added that broadcasting and television businesses can be exempt from Chinese business tax for basic maintenance fees for cable digital television pending government approval by the end of 2010.

There will be VAT rebates on exports including “cultural products, ” such as books, newspapers, periodicals, audio-visual products, electronic publications, films and TV series. Cultural enterprises are free from business tax for revenues made from overseas performances, according to the Xinhua.

High-tech companies supporting cultural industry are qualified for a preferential income tax of 15 percent.

The new preferential China tax policies will last for five years ending on December 31, 2013.

China's value-added taxes contribute a large percentage of China's annual tax revenue and account for a significant proportion of tax liabilities for many Chinese enterprises. They affect companies that sell, manufacture, process or repair tangible goods in China and can be quite complex. In 2003, China began a massive reformation of its VAT system, launching pilot programs in Northeast China. Following the program's success in the provinces of Heilongjiang, Jilin, and Liaoning, the central government implemented the VAT reforms nationally in 2009.

China started to implement VAT in 1984 on 24 specified taxable items and on December 13, 1993, the State Council promulgated “The Provisional Regulation of the People's Republic of China on Value Added Tax" with the intent of “unifying taxation management, equalizing the tax burden, simplifying the tax system, and guaranteeing financial revenue. " This law, which codified China's VAT system, has been in use ever since.

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