It is reported by SECURITIES DAILY (note: the link is in Chinese) that there will be adjustment on tax policy in China animation industry. In recent, China Ministry of Finance and the State Administration of Taxation jointly issued a new policy supporting the animation industry, which introduces the VAT and the preferential business tax. And less tax and taxation of the both VAT and business tax will be made hereby.
I. For the sales of the independently developed animation software by the company of the general tax payer itself, the VAT shall be levied at the rate of 17% first, and the exceeding 3% amount of the actual tax bearing will be refunded. That’s the so called levy-refund policy.
II. The export of animation software is free of VAT, which is implemented from 1st January, 2011 to 31st December, 2012.
III. In the term of business tax, the reduced rate of 3% is applicable to the peripheral industries providing the animation enterprises with services, involving picture, word, music, technical production, etc., and the income of the animation enterprises gained from the works transfer and license in the country as well as the transaction of brands.
According to the report, there’s no doubt the tax preferential policy mentioned above can relieve the stress on animation enterprises, while as some experts believe there is still room for further tax exemption on the industry.
Bridge IP Law Commentary thinks the relevant policies will promote the industry of animation production, the development of online games, etc.. Additionally, according to the Notice on Several Opinions in Promotion of China’s Animation Industry jointly issued by the Ministry of Finance and other departments, and the Catalogue of Industries for Guiding Foreign Investment (2011 revised) promulgated in the last month, the foreign enterprises and individuals are encouraged to do investment in establishment of animation enterprises in China, and the aforesaid preferential policy obviously will further promote the foreign investment in animation industry in China.
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Paralegal of DeBund Law Offices
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Partner & Attorney-at-law of Shanghai DeBund Law Offices
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