Investing in China’s Entertainment and Media Market – Lifted Restrictions and Tax Incentives

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filmmakingBy Dezan Shira & Associates
Editor: Jake Liddle

In the past, China’s entertainment industry has been marked by significant restriction, and has been relatively closed to outside influence and investment. However, recently there have been signs of relaxing restriction or improvements to the industry.

A clear example of this can seen in a draft that was passed on October 30, which announced the cancellation of filmmaking licenses and general screenplay enquiries; banned advertisements during screenings; and banned entities without a film release permit to attend film festivals and exhibitions. Such regulation changes and incentives are charged with gradually opening the industry to foreign investment.

According to the latest release of Cai shui [2014] No. 84 and 85, cultural enterprises’ CIT (corporate income tax), VAT (value-added tax), and import and export tax are eligible for tax incentives. Though primarily restricted as stipulated in the Catalogue of Industries for Guiding Foreign Investment, the following industries are accessible to foreign investors in conjunction with Chinese controlling shareholders and joint ventures.

High-tech Cultural Enterprises

From January 1 2014 to December 31 2018, cultural enterprises engaging in the field of cultural support technology and identified as high-tech enterprises are eligible for a CIT Reduced rate of 15 percent plus deduction.

Outsourced Entertainment Services

From January 1 2014 to December 31 2018, outsourced entertainment service enterprises in State Council approved model cities are eligible for a reduced rate of 15 percent on CIT and a further tax deduction on training expenses. 

Publications and Publishing Sector

From January 1 2013 to December 31 2017, CCP publications, publications for primary and secondary school students, for the elderly, for ethnic minorities, braille publications and publications wholesaled by registered publishing companies in the five autonomous regions of Inner Mongolia, Guangxi, Tibet, Ningxia and Xinjiang qualify for a 100 percent VAT rebate. Other book, journal, audio or digital publications exempt from the above list are eligible for 50 percent VAT rebate. From January 1 2013 to December 31 2017, manufacturing expenditure for publications printed in ethnic minority scripts or languages qualify for a 100 percent VAT rebate. From January 1 2013 to December 31 2017, wholesale and retail of books is VAT exempt. 

Professional Service_CB icons_2015RELATED: Tax and Compliance Services from Dezan Shira & Associates
Film Distribution and Screenings

From January 1 2014 to December 31 2018, income from producing, distributing and screening of central, provincial, municipal and county level news publishing radio and television administration departments is exempt from VAT. From January 1 2013 to December 31 2017, animation companies selling their own produced and developed animation software may enjoy a VAT rebate if the VAT burden surpasses 3 percent.

Cable Television Fees

From January 1 2014 to December 31 2016, cable and digital viewing and maintenance fees received by broadcasting service enterprises are exempt from VAT. 

Export Sector

As of December 1, 2015, the export of production and distribution services of radio, film and TV programs provided by Chinese companies or individuals to overseas companies shall enjoy a zero-rated VAT.

From January 1 2014 to December 31 2018, cultural service exports encouraged by the state which are included in the scope of VAT qualify for exemption or zero rate. From January 1 2013 to December 31 2017, exports of animation software are VAT exempt.

Import Sector

From January 2014 to December 31 2018, equipment and spare components which must be imported in order to enable enterprises to undertake cultural industry projects encouraged by the state within regulation are exempt from import duties. Necessary imported goods for development and production of independent animation firms are exempt from import duties and are subject to the import sector’s VAT incentives.

Restrictions and Opportunities for Investors

Though some of the above mentioned sectors are largely restricted to foreign investment according to the Catalogue of Industries for Guiding Foreign Investment, some areas, such as printing and film industries, are encouraged by the state as long as a Chinese party is involved as a controlling shareholder.


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