Recently, the Ministry of Finance ("MOF") and the State Taxation Administration ("STA") jointly issued the Circular on Renewing Value-added Tax Policies in Support of the Development of Culture Enterprises (the "Circular"), retrospectively effective from January 1, 2019 till December 31, 2023.

   The Circular expressly states that, for film group companies, film studios and other film-related enterprises that engage in the production, distribution and screening of films, as approved by competent film authorities within their respective functions and authority, both their income derived from the sale of film copies, the transfer of film copyright and the distribution of films, and the income earned from screening movies in rural areas, will be exempt from value-added tax (VAT). Moreover, the Circular provides that, the basic cable digital TV viewership maintenance costs, and the basic fees for rural cable TV viewership, charged by enterprises offering operating services for radio and TV programs, will also be exempt from VAT. Where the VAT payments that could be exempted under this Circular have already been collected and included into the treasury before this Circular is released, the amount of such VAT payments could be used to offset their payable VAT for future tax periods, or alternatively be refunded.

(Source: MOF)