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Preferential tax policies launched to boost Chinese film industry

(People's Daily Online)    10:15, May 18, 2020

Preferential tax policies have been launched to give the Chinese film industry a boost in the wake of the impact brought by the COVID-19 epidemic. Meanwhile, Chinese domestic cinemas are expected to reopen in June, according to industry insiders.

Citizens walk past a closed cinema. (Photo/Chinanews.com)

The Ministry of Finance of China and the State Taxation administration made the announcement on May 14, saying that from Jan.1, 2020 to Dec. 31, 2020, tax payers will be exempted from VAT on their income from film screening services.

The favorable policy news resulted in stocks from the film and television industry rallying after the afternoon opening on May 14, going up more than 1 percent at one point.

"These policies are all good for our cinemas," said Deng Yonghong, general manager of the Capital Cinema, adding that in general, the taxes and fees a cinema has to pay together do not exceed 10 percent of its income, of which a special fund for film development accounts for 5 percent.

"The cinemas were open in January this year and closed in February, and there has been no box office in the past few months. If they can reopen in June, it will be equivalent to four months of exemption for special funds for film development," Deng explained.

Special funds for film development will be used to support some key domestic films and the construction of cinemas, Deng said, adding that he expects the relevant departments to issue preferential policies on the use of funds soon.

On the subject of the resumption of work, several industry insiders speculated that China's cinemas will open in June.

"June is likely to be a miserable month at the box office, with a gradual recovery in July and a return to normal in August. The market will prosper during the National Day holiday," predicted Liu Jianxin, general manager of a cinema company in Beijing.

From Liu's perspective, cinemas may face some losses in the early days of reopening, but even then they should remain open "because if everyone else opens the door and you don't open, you may be forgotten by the visitors, and people will think that something is wrong with you, which will affect the reputation of the cinema."

Deng Yonghong predicts that when school breaks for the summer vacation in July, the film industry will boom like did in the period following the end of SARS. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Hongyu, Liang Jun)

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