The Ministry of Finance, General Administration of Customs and State Administration of Taxation have recently issued in their joint names a circular on some tax policies for the conversion of operational cultural institutions into cultural enterprises and a circular on some tax policies in support of the development of cultural enterprises. 

These departments have formulated a series of preferential tax policies to promote cultural system reform since 2004. They have recently added some new policy provisions to address new situations and new problems in reform. The implementation period lasts from 1 January 2009 to 31 December 2013. The following are some of the new tax concessions offered:

In order to support the conversion of operational cultural institutions, the newly formed cultural enterprises are exempt from enterprise income tax from the day of conversion. Cultural units receiving allocations from the Ministry of Finance that convert into enterprises will be exempt from real estate tax for own-use property from the day of conversion. 

Cultural enterprises formed by the spin-off of the distribution, printing and related operational assets of party newspapers and magazines will be exempt from value-added tax (VAT) for distribution and printing revenue derived from the party newspapers and magazines from the day of registration. Enterprise income tax on the appreciation of asset value as appraised during the course of conversion from operational cultural institution to cultural enterprise, as well as the VAT, business tax, urban construction tax and other levies on the re-assignment or transfer of assets, are offered appropriate concessions. 

In order to promote the development of newly formed cultural enterprises, film groups, movie studios and other film enterprises engaged in the production, distribution and screening of films are exempt from VAT and business tax on income from the sale of film copies, income from the transfer of film copyrights, income from the distribution of films and income from the screening of films in rural areas. Imports of equipment, accessories and fittings that are currently not produced in China but needed for the production of key cultural products for own use are exempt from import tariffs. 

In order to encourage cultural enterprises to "go global", exports of books, newspapers, periodicals, audio-visual products, electronic publications, films and TV programmes are eligible for VAT rebate. Proceeds obtained offshore by cultural enterprises from performances staged outside the mainland will also be exempt from business tax.