The Ministry of Finance ("MOF") and the State Administration of Taxation ("SAT") have recently issued the Circular on Clarifying the Exemption of Elderly Care Agencies from Value-added Tax and Other Policies (the "Circular"), immediately effective from the date of issuance.
The Circular expressly states that, from February 1, 2019 till December 31, 2020, where a medical institution provides, as entrusted by another medical institution, the services specified under relevant provisions at prices that are not higher than the medical service prices suggested by the competent price authority at the prefecture (city) level in concert with the competent health authority at the same level as well as other relevant departments, such services may be eligible for the value-added tax (VAT) exemption policy set out in relevant provisions. Also, the Circular reads that, from February 1, 2019 to December 31, 2020, the free lending of funds between entities within a company group will be exempt from VAT. Furthermore, the Circular notes that, a return-of-premium life insurance product with the insurance period of longer than one year, rolled out by an insurance company, shall be governed by relevant provisions, one of which reads that "an insurance company may carry out record-filing formalities with the competent tax authority, provided that it satisfies the tax exemption conditions set out in Articles 1 and 2 of the policy document (Cai Shui [2015] No.86) and is not on the list of companies exempted from business tax published by the MOF and the SAT".