Notice Concerning Printing and Issuing Two Regulations on Supporting Cultural Industry Development and Commercial Undertaking Work Units Transforming into Enterprises in Cultural Structural Reform Trial Points
All provincial, autonomous region and municipal people’s governments and all State Council ministries and commissions, and all directly subordinate organs
The Central Propaganda Department jointly with relevant entities and work units the Central Organization Department, Central Staffing Department, Reform and Development Commission, Ministry of Finance, Ministry of Personnel, Ministry of Labour and Social Security, General Administration of Taxation, State Administration of Industry and Commerce, State Administration of Radio, Film and Television, General Administration of Press and Publications, etc., put forward the “Regulations on Supporting Cultural Industry Development in Cultural Structural Reform Trial Points (Trial)” and the “Regulations on Supporting Commercial Undertaking Work Units Transforming into Enterprises in Cultural Structural Reform Trial Points (Trial)”, the State Council agreed with them, and they are hereby issued to you, please implement them earnestly.
Attachment 1: “Regulations on Supporting Cultural Industry Development in Cultural Structural Reform Trial Points (Trial)”
Attachment 2: “Regulations on Supporting Commercial Undertaking Work Units Transforming into Enterprises in Cultural Structural Reform Trial Points (Trial)”
Attachment 1: “Regulations on Supporting Cultural Industry Development in Cultural Structural Reform Trial Points (Trial)”
In order to promote cultural structural reform trial point work, stimulate cultural industry development, the following Regulations are formulated.
I, Concerning finance and taxes
1. Trial point regions may arrange for special cultural industry development funds, and formulate corresponding utilization and management rules, adopt methods such as discounts and subsidies, etc., to support cultural industry development.
2. To government-encouraged newly organized cultural enterprises in the newspaper sector, publishing, distribution, radio and television, film, screening, performing arts, etc., treatment of exemption from one to three years of enterprise income tax may be extended.
3. To trial point culture groups in the newspaper sector, publishing, distribution, radio, television, film, etc., that conform to regulations, preferential enterprise income tax collection policies may be extended.
4. Cultural product export may enjoy export tax rebate policies according to present State taxation regulations, no commercial tax is levied over foreign income from culture labour export, and this is exempt from enterprise income tax; advanced technology imported for producing focus culture products or import of required private-use equipment, sets and spare part, etc., according to presently existing tax law regulations, is exempt from import customs tax and import-segment value-added tax.
5. Where culture enterprises have difficulties in paying taxes, they may apply for mitigation of town and city land use tax and housing tax for land and buildings used in commerce.
6. Encouraging setup of high and new technology cultural industries, encouraging and guiding social capital to invest in high and new technology. Culture work units engaging in research, production and dissemination of digital radio, film and television, databases, electronic publishing, etc., in all cases where they conform to State preferential taxation policies concerning high and new technology enterprises, they may enjoy corresponding preferential taxation policies.
7. Income from film copies sold by film studios established with State Council approval is exempt from value added tax; income from distributing films by film distribution enterprises to film screening work units is exempt from commercial tax.
II, Concerning investment and capital
8. To those investing in setup of culture enterprises, within the scope permitted by policy, reducing administrative examination and approval segments, simplifying examination and approval formalities, it is prohibited to collect any added expenses outside of policy provisions.
9. Party newspapers, Party periodicals, radio stations, television stations and other important news media’s commercial part is to be separated and reformed into enterprises, and under the presupposition of guaranteeing absolute State control of shares, they are permitted to attract capital from society; State-owned distribution groups, science and technology-type newspapers and periodicals turning into enterprises and publishing work units, under the presupposition that State-owned investment subjects control shares, are permitted to attract investment from other capital from domestic society; radio and television transmission network companies, under the presupposition that State-owned capital controls shares, may attract State-owned capital and private capital with permission.
10. Capital from society is encouraged, supported and guided to initiate film production, screening, performance, entertainment, distribution, exhibition, intermediary service and other cultural enterprises through methods such as shareholding systems, privately, etc., and enjoy the same treatment as State-owned cultural enterprises.
11. Through shareholding system reform, realizing cultural enterprises with diversified investment subjects, those meeting conditions may apply to go on the market.
III, Concerning asset management
12. On the basis of strengthening asset management and doing asset appraisal work well, cultural enterprises may, according to the uniform State policies concerning checking on enterprise assets, successively deduct State-owned rights and interest and State-owned capital for asset damage and bad assets discovered in the previous year.
13. Publishing and distributing work units implement a method of appraisal year by year and drawing or deducting price differences concerning losses because of idly stored publications. Where the annual merchandise price loss value is within the provided scope, they are permitted to transfer accounts of their own initiative.
IV, Concerning industry and commerce management
14. To invest in cultural enterprises and set up a limited liability company with a registered capital of less than 500.000 Yuan, it is permitted to introduce the registered capital in stages within three years, and the first stage may not be lower than half of the required registered capital.
15. Investors are permitted to put up capital to establish cultural enterprises through trademark, brand, technology, scientific research achievements and other intangible asset valuation, the proportion of the valuation in the registered capital may not exceed 40%.
V, Concerning prices
16. A governmental fixed price is implemented for the price of fundamental public radio and film services’ basic watching service prices, a government guide price is implemented for the price of other provided by radio and television cable networks, enterprises formulate them according to the basic price rate determined by governments and their range of flotation, and according to the situation of market requirements; the price of performance tickets is decided by the market. At the same time as cultural undertaking work units transforming into enterprises, enterprises meeting conditions are to implement separation of government and enterprise as soon as possible.
The above policies are only to be applied in cultural structural reform trial work units or trial regions, concrete work units are examined and approved by the Cultural Structural Reform Trial Work Leading Small Group Office together with the Ministry of Finance and the General Administration of Customs. The implementation period is from 1 January 2004 to 31 December 2008.
Regulations on Commercial Cultural Undertaking Work Unit Transforming into Enterprises in Cultural Structural Reform Trials (Trial)
In order to promote cultural structural reform trial work, vigorously and reliably stimulate commercial cultural undertaking work units to transform into enterprises, the following regulations are formulated.
I, Concerning State-owned cultural asset authorization operations
1. Central trial cultural enterprise groups and asset operation and management companies, etc., that implement commercial State-owned asset authorization operations, are to report to the State Council for approval and authorization. Relevant departments may organize a dispatched supervision group. Authorization operation trial work units’ original administrative management and Party leadership relationships do not change.
2. Local trial cultural enterprise groups and asset operation management companies, etc., may, according to the abovementioned method, conduct corresponding matters, and ma also adopt other management methods conforming to the reality of their locality, plans must be reported to the Cultural Structural Reform Trial Work Leading Small Group Office for filing.
II, Concerning dealing with assets
3. Cultural undertaking work units, in the process of change, must strengthen management over State-owned assets, and according to regulations, do asset investigation, auditing and asset appraisal work well, and cancel investigated asset losses according to regulations, after verification and approval. After change, the “Enterprise Accounting Rules” are implemented.
4. Publishing and distribution work units changing into enterprises, at the time of change, may combine asset appraisal and doing a one-time disposal of their overstocked publications that await discarding, losses are permitted to be drawn from net assets, after transformation, the method of annual appraisal is implemented for idle losses of stocked publications, and a percentage is deducted from the price difference. Annual product loss amounts, within the provided scope, are permitted to be transferred between accounts on one’s own initiative.
III, Concerning income distribution.
5. After transformation, and enterprise income distribution system is implemented. Personnel salary distribution shall be priced according to the labour market, and reasonable differences opened, those already implementing shareholder diversification, shall set up a special organ in the broad of directors, to plan reasonable personnel salary systems.
6. We must separate the income distribution of managers and personnel, and not permit managers to decide on their own income distribution by themselves. In State-controlled enterprises that have already realized shareholder diversification, market mechanisms must be drawn into manager selection, appointment and income discussion, and it is to be decided by the board of directors; exclusively State-owned enterprises shall, with reference to State Council regulations relating to capital supervision management board issuing the annual income of managers, etc., rules for the income distribution of managers must be deliberated by the personnel representation meeting and reported to the government controlling department for examination and approval according to regulations.
7. Currently existing subsidies outside of salaries, bridge subsidies, benefits and other programmes must be tidied up, the reasonable part in them must be brought into salary distribution; professional expenses of managers in aspects such as transport, communications, etc., shall be integrated with reform of corresponding systems, and be progressively brought into individual income. Part of the housing provision fund and housing subsidies of personnel in the original undertaking personnel allocation, shall be borne by the group to which the transformed enterprise is subordinate, after transformation, these are continually appropriated by the group.
8. Relevant departments conduct guidance and control over income distribution in enterprises after transformation, according to cultural industry labour force market values.
IV, Concerning social security
9. After transformation, social security must be participated in according to regulations. Those already participating in social security before transformation, will continue to be implement this according to the original rules, trial regions’ relevant social security organs are responsible for performing joining work; those not having participated in social security before transformation, participate in social security from the day of transformation. The continuous service of employed personnel is to be calculated at the time of transformation according to State regulations, and this is considered as fee-paying years, there will be no supplementary fees paid for basic pension insurance.
10. For personnel already retired before transformation, the original state-provided pension treatment standards do not change, concrete rules for payment and adjustment of this sort of person’s retirement treatment after transformation, are to be implemented according to the relevant policies of documents LSBF No. 2 and LSBF No. 5.
11. For personnel participating in work before transformation and retiring after transformation, basic pension calculation, issuance and adjustments are to be implemented according to the method of the enterprises. Within a transition period of five years after transformation, if basic pensions calculated and issued according to enterprise methods are lower than the retirement pension calculated and issued according to the original undertaking work unit retirement method, additional issue subsidy methods are adopted to resolve the differential part, the required fees are paid from basic pension insurance comprehensive funds, comprehensive rules are to be implemented according to the relevant provisions of document LSBF No.2.
12. For the medial insurance of retired personnel, the present methods will be continuously implemented, required funds will be resolved through the original channels; those among personnel already having retired before transformation, and enjoy the original free medical care, may, on the basis of enjoying basic medical insurance treatment, be given medical subsidies with reference to State rules concerning government official medical subsidies.
13. After transformation, it is permitted to establish enterprise annuity and supplementary medical insurance funds for personnel according to relevant regulations, and appropriately resolve the problems of linking the pension treatment levels of personnel retiring after transformation through enterprise annuities. Whole fund accumulation is implemented for enterprise annuities, and management is conducted by adopting the individual account method, costs are paid by the enterprise and individual employees, enterprise fee payments are a part of 4% or lower of total salary amounts, which may be listed into costs.
V, Concerning personnel dismissal and placement.
14. Personnel which is within 5 years of the statutory State retirement age at the time of transformation, on the basis of reaching agreement with this person through consultation, may retire early, the salary of the retirement period, benefits and other basic treatment does not change, the work unit and individual continue to pay all social security fees according to regulations, and when they reach the statutory State retirement age, retirement formalities are concluded according to enterprise methods.
15. At the time of transformation, labour contracts must be concluded with the original undertaking personnel allotment personnel according to the “Labour Law of the People’s Republic of China”. After transformation, where it is necessary to dismiss personnel on the basis of the direction of business, appropriate placement will be made according to enterprise rules for the dismissal of surplus personnel.
VI, Concerning finance and taxation
16. Taxation policies enjoyed in the past will be continuously implemented after transformation.
17. Financial administration will be responsible for bearing a part of the personnel housing provision funds and housing subsidies in original undertaking work unit personnel allocation, and after transformation into enterprises, it will continue to be appropriated from financial departments’ budgets, after transformation, the original regular undertaking fees will continue to be appropriated, and will mainly be used to resolve the problem of social security for personnel already retired before transformation.
18. In order to guarantee the smooth conduct of transformation work, the same level’s financial administration may appropriate a one-time sum, mainly to be used for asset appraisal, financial auditing, policy and law consulting, etc.
19. Concerning being exempt from enterprise income taxes after transforming into enterprises, the originally enjoyed special propaganda and culture development fund preferential policies related to income tax shall be cancelled.
20. For cultural product export , it is permitted to enjoy export tax rebate policies according to existing state taxation laws and regulations, no business tax is levied over foreign income of cultural labour export, and this is exempt from enterprise income tax; income of equipment and spare parts for own use, etc., according to present taxation laws and regulations, is exempt from income tariffs and import-segment value added tax.
VII, Concerning legal person registration
21. The original work unit name may be used as the enterprise name after transformation (after deleting the controlling departments), or another name conform to enterprise name registration requirement is used.
22. After transformation, the undertaking personnel allocation must be cancelled, and the undertaking work unit legal person must be cancelled. At the same time as transforming undertaking work units into enterprises, enterprises meeting conditions must as soon as possible implement separation of government and enterprises.
The abovementioned policies only apply to cultural structural reform trial work units and trial regions, concrete work units are appointed by the Cultural Structural Reform Trial Work Leading Small Group Office together with the Ministry of Finance and the General Administration of Taxation. The implementation period is from 1 January 2004 until 31 December 2008.