The Circular clearly states that from January 1, 2017 to December 31, 2019, the interest income derived from granting small loans to farmer households by small loan companies that are established upon approval of the provincial administrative departments of finance (finance offices or bureaus) is exempt from value-added tax (VAT); and when the taxable income is calculated, 90 percent of such interest income will be included into the total income. Also, the Circular sets forth that the loan loss reserves withheld at the rate of 1 percent based on its balance of loans at the end of a year are allowed to be deducted before the enterprise income tax. For the purpose of the Circular, a small loan refers to a single loan granted to a farmer household with the total remaining amount of loan less than CNY100,000 (inclusive). Furthermore, the Circular indicates that the amount of VAT that should be exempted but has been levied between January 1, 2017 and the promulgation date of the Circular could be either used by the taxpayer to offset against its VAT payable of the following months or refunded to the taxpayer.