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Chinese Cartoon Producers Will Enjoy Preferential Tax Policies

Thursday, February 18, 2010

A total of 100 cartoon production companies in China have passed scrutiny and become certificated by the Ministry of Culture, the Ministry of Finance and the State Administration of Taxation in order to gain entitlement to preferential tax treatment.

Selected as key players from about 400 candidates across the nation, these companies, 34 of whom have registered capital of at least RMB10m (USD1.47m), will be exempt from at least six types of taxes this year. Of these enterprises, 26 are located in Beijing, 15 in Jiangsu, 10 in Hunan, eight in Guangdong, and seven in Tianjin.

They will be entitled to preferential tax treatment in value-added tax, corporate income tax, business tax, import tariff, and import-related VAT. From May to July each year, provincial agencies will conduct annual inspections to ensure that the companies live up to expected standards in order to continue enjoying preferential tax treatment.

The Ministry of Culture published a policy statement last August, laying out China's ambition to become a big player in the industry, supported by the 300 million or more Chinese youngsters who watch cartoons. According to China Daily, Chinese cartoons shine on the world stage, now that cartoon channel Nickelodeon has launched ChinaToon, a one-hour segment showcasing original Chinese animations.

An audience of more than 242 million households across 13 Asian nations is expected to watch Creative Power Entertaining's Pleasant Goat and Big Big Wolf and Zhejiang Zhongnan Group Animation Video's Magic Wonderland.

Pleasant Goat and Big Big Wolf is watched avidly in the Chinese mainland and Taiwan, leading to a touring hit musical, and feature film with box office receipts of RMB60m (USD8.78m).

Xiao Yongliang, deputy dean of the School of Arts and Communication, Beijing Normal University, told China Daily that the government had promoted the industry since 2006 by investing, giving tax breaks and setting up an office to coordinate efforts. Xiao pointed out that China could learn from the US, where at "Disney, Pixar, or Dreamworks, there are special teams developing software to make cartoons, but in China, we only use foreign techniques."

The certification jointly carried out by the Ministry of Culture, the Ministry of Finance and the State Administration of Taxation is considered an important step to implement the nation's fiscal policy in support of animation enterprises in an all-around way.