Tax Preferential Policy in China’s Animation Industry

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.

Editor: Ms. Chen Danhong
Paralegal of DeBund Law Offices
Co- editor: Mr. You Yunting
Founder & Editor-in-Chief of Bridge IP Law Commentary
Partner & Attorney-at-law of Shanghai DeBund Law Offices
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Bridge IP Law Commentary is a website focus on the introduction of commercial laws in China, especially the intellectual property laws. All the posts here are our original works. And all news or cases referred here are from public reports, and our comments or analysis are of due diligence, neutrality and impartiality, representing our own opinions only and are our original works. You may contact us shall you have any opinions or suggestions.


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