Announcement by the Ministry of Finance, the State Taxation Administration, and the Publicity Department of the CPC Central Committee on Tax Policies for the Conversion of Commercial Cultural Institutions into Enterprises under the Framework of Cultural System Reform

December 6, 2024 — The Ministry of Finance, the State Taxation Administration, and the Publicity Department of the CPC Central Committee jointly issued Announcement No. 20 of 2024, providing tax policy support to promote the conversion of commercial cultural institutions into enterprises, thereby advancing the cultural system reform.

I. Key Tax Incentive Policies

(1) Corporate Income Tax Incentives

Institutions converted into enterprises, having completed registration as corporate legal entities and the lawful and regulated cancellation of their institutional registration or staffing quota by December 31, 2022, shall be exempt from corporate income tax from the date of registration until December 31, 2027. This policy applies to conversions of entire entities or spin-offs in fields such as news publishing, broadcasting, film, and the arts. The date of conversion shall be determined based on the registration of the corporate entity or specific legal entity, as applicable.

(2) Real Estate Tax Incentives

Cultural institutions converted within the specified period and funded by fiscal allocations, using self-occupied properties, shall be exempt from real estate tax from the date of registration until December 31, 2027. This policy reduces operational costs and enables enterprises to focus resources on their core business development.

II. Conditions for Tax Incentive Eligibility

(1) Basis for Conversion and Registration

The conversion process must comply with approvals from relevant authorities, with completion of corporate entity registration to ensure legal compliance, clear ownership, and alignment with market operation requirements.

(2) Staffing and Legal Entity Disposal

For institutions with prior legal entity registration, staffing quotas must be canceled, and institutional legal entities deregistered after conversion. For institutions without legal entity registration, only staffing quotas need to be canceled. This ensures a thorough market-oriented transition and optimizes resource allocation and operational efficiency.

(3) Protection of Employee Rights

Enterprises must enter into labor contracts with existing employees and enroll them in social insurance programs as per corporate requirements. This measure stabilizes labor relations and strengthens enterprises' human resource foundations and social responsibility.

(4) Regulation of Capital Operations

When introducing non-public or foreign capital, enterprises must strictly comply with laws and regulations. Any changes in capital structure must be lawfully approved to ensure orderly capital flows within the industry and maintain market stability.

III. Enterprise Recognition and Management

(1) Recognition Entities and Processes

Enterprises under central jurisdiction shall be recognized and listed by the Publicity Department of the CPC Central Committee in coordination with the Ministry of Finance and the State Taxation Administration. Local enterprises shall be recognized and listed by local publicity departments in collaboration with financial and taxation authorities, with the results reported to higher authorities. This hierarchical recognition system ensures precise implementation of the policy.

(2) Detailed Rules on Changes

For enterprises undergoing name changes without altering their primary business, tax registration changes may proceed with consent from publicity authorities. If primary business changes, the enterprise must be re-recognized in accordance with the conditions stipulated in the announcement, balancing enterprise flexibility with policy integrity.

(3) Procedures and Supervision Mechanisms

Recognized enterprises must follow regulations for tax incentive applications and retain key documents for potential inspections. Tax authorities shall strengthen subsequent supervision. Enterprises not recognized or failing to meet stipulated conditions shall not enjoy the incentives. For enterprises that improperly received incentives, tax authorities shall recover the taxes, while overpaid taxes eligible for reductions or exemptions may be offset or refunded according to regulations. These measures ensure the fairness and authority of the policy and its precise enforcement.

Ministry of Finance, State Taxation Administration, and Ministry of Housing and Urban-Rural Development Issue the "Announcement on Tax Policies to Promote Stable and Healthy Development of the Real Estate Market"

On November 13, the Ministry of Finance, the State Taxation Administration, and the Ministry of Housing and Urban-Rural Development jointly issued the "Announcement on Tax Policies to Promote Stable and Healthy Development of the Real Estate Market", which clarifies several tax incentives aimed at supporting the real estate market.

Key Tax Policies Outlined in the Announcement

1.Deed Tax Incentives

The announcement strengthens deed tax relief measures for housing transactions to actively support residents' demand for first homes and improved housing. The eligibility threshold for the 1% preferential deed tax rate has been increased from 90 square meters to 140 square meters. Furthermore, Beijing, Shanghai, Guangzhou, and Shenzhen are now allowed to apply the same preferential deed tax policies for second homes as other regions.

Under the revised policy, for personal purchases of the sole home for a household or a second home, if the area does not exceed 140 square meters, the deed tax will be uniformly levied at a 1% rate nationwide.

2.Land Value-Added Tax (LVAT) Reductions

The lower limit for the pre-levy rate of land value-added tax has been reduced by 0.5 percentage points across all regions. Local authorities may further adjust the actual pre-levy rates based on local conditions, thereby alleviating financial difficulties faced by real estate enterprises.

3.VAT and LVAT Policies Linked to the Removal of Residential Standards

Value-Added Tax (VAT): In cities that have removed the "ordinary residential" classification, individuals selling residential properties purchased at least two years ago (including two years) will be exempt from VAT. The prior regulation, which imposed VAT on sales of non-ordinary residential properties purchased for at least two years in Beijing, Shanghai, Guangzhou, and Shenzhen, will cease to apply.

Land Value-Added Tax: For cities where the "ordinary" and "non-ordinary" residential classifications have been removed, taxpayers constructing and selling standard residential properties with added value not exceeding 20% of the deductible costs will continue to enjoy the exemption from land value-added tax.

4.Implementation and Transition Arrangements

To ensure broader access to the policy benefits, the relevant authorities clarified the following:

For individuals who purchase residential properties and file deed tax declarations on or after December 1, 2024, or who purchased properties before December 1, 2024, but file deed tax declarations thereafter, the provisions of the newly issued announcement will apply.

Similarly, for individuals selling residential properties involving VAT payments that have not been declared before December 1, 2024, the new policies may also apply if they meet the criteria outlined in the announcement.

Officials from the Tax Policy Department of the Ministry of Finance, the Property and Behavior Tax Department and the Goods and Services Tax Department of the State Taxation Administration, and the Real Estate Market Regulation Department of the Ministry of Housing and Urban-Rural Development emphasized in a press conference that these measures aim to allow a broader range of taxpayers to benefit from the tax reforms, reduce housing transaction costs, and stabilize the tax burdens of real estate enterprises.