Six Ministries Announce VAT Exemption for Community-Based Elderly Care, Childcare, and Domestic Services

VCBeat (WeChat ID: vcbeat) has learned that on July 4,Ministry of Finance, State Taxation Administration, National Development and Reform Commission, Ministry of Civil Affairs, Ministry of Commerce, National Health CommissionAnnouncement on Tax and Fee Preferential Policies for Community Household Service Industries, Including Elderly Care, Childcare, and Domestic ServicesFrom June 1, 2019, to December 31, 2025,Income derived from the provision of community-based elderly care, childcare, and domestic services shall be exempt from value-added tax.; when calculating taxable income, 90% of the amount shall be included in total revenue.

The full text of the policy is as follows:

To support the development of community-based family services such as elderly care, childcare, and domestic services, the following announcement is hereby made regarding relevant tax and fee policies:

I. Institutions that provide elderly care, childcare, housekeeping, and other services to communities shall enjoy preferential tax and fee policies in accordance with the following provisions:

(1) Income derived from providing community-based elderly care, childcare, and domestic services,Exempt from Value-Added Tax (VAT)。 

(2) Income derived from providing community-based elderly care, childcare, and domestic services, 90% of the amount shall be included in the total revenue when calculating taxable income. 

(3) Where houses and land are acquired for the purpose of providing community-based elderly care, childcare, and domestic services;Exempt from deed tax.

(4) Real estate and land used to provide community-based elderly care, childcare, and domestic services shall be exempt from real estate registration fees, cultivated land reclamation fees, land rehabilitation fees, and idle land fees;

Construction projects for providing community-based elderly care, childcare, and domestic services are exempt from urban infrastructure supporting fees.

Where the construction of underground air-raid shelters is indeed infeasible due to geological conditions or other reasons, the off-site construction fee for such shelters shall be exempted.

2. Property and land owned by institutions providing elderly care, childcare, and domestic services to the community, or acquired by them through leasing, gratuitous use, or other means for the purpose of delivering such community-based elderly care, childcare, and domestic services, shall be exempt from real estate tax and urban land use tax.

III. The term “community” as used in this Announcement refers to a social living community composed of people residing within a defined geographic area, including both urban and rural communities.

Community-based elderly care service providers refer to enterprises, public institutions, and social organizations that leverage fixed premises and facilities within communities to deliver elderly care services to residents through models such as full-time residential care, day care, and home-based services. Community-based elderly care services encompass life assistance, rehabilitation and nursing care, meal support and mobility assistance, emergency rescue, and emotional support provided to the elderly.

Community-based childcare service providers refer to enterprises, public institutions, and social organizations that leverage fixed premises and facilities within communities to offer childcare services to residents through various models, including full-day care, half-day care, hourly care, and temporary care. Community-based childcare services refer to the provision of care, supervision, dietary support, and nurturing services for infants and toddlers aged three years and under.

Agencies providing domestic services to the community refer to enterprises, public institutions, and social organizations that target households and provide domestic services to community residents. Community domestic services refer to care services provided to pregnant and postpartum women, infants and young children, the elderly, patients, and persons with disabilities in their homes or in medical institutions, as well as cleaning, cooking, and other services provided in the homes of family members.

IV. Income derived by domestic service enterprises that meet the following conditions from providing domestic services shall be exempt from value-added tax, in accordance with the provisions of Article 1, Item (31) of the “Provisions on Transitional Policies for the Pilot Program of Replacing Business Tax with Value-Added Tax” (Attachment to Caishui [2016] No. 36).

(1) Enter into a tripartite agreement with domestic service workers and clients receiving domestic services regarding the provision of such services;

(2) Disburse remuneration to domestic service workers and conduct training and management for them;

(3) Register and manage domestic service workers by establishing a business management system.

V. Fiscal authorities and tax collection agencies may, based on operational needs, establish information-sharing and collaborative mechanisms with civil affairs, health, commerce, and other relevant departments. These departments shall actively cooperate to ensure the effective implementation of preferential policies.

VI. This Announcement shall be effective from June 1, 2019 to December 31, 2025.

Source:

Ministry of Finance Portal Website: http://www.mca.gov.cn/article/xw/tzgg/201907/20190700018170.shtml