China Offers Tax Support to Film Businesses Hit By Coronavirus

A man walks past a closed
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The mainland Chinese government has unveiled two additional support measures for the film industry, which has suffered the impact of the coronavirus outbreak for nearly four months.

China’s tax authorities will waive value added tax payments for film screening service providers, official news agency Xinhua reported on Friday. The exemption lasts for the whole of 2020, and taxes already paid may be reclaimed or set off against future payments. The same companies will also not be required to pay construction and certain other administrative fees this year.

Companies throughout the film business in China will be able to carry forward losses for eight years, instead of the usual five years. That reflects the dire situation in which many Chinese film companies fins themselves.

Cinemas have been closed nationwide since the last week of January. As yet, no official date has been given when they may reopen, though some indications now point to a restart at the end of May or beginning of June.

That lockdown, exceeding four months, is far longer than in many other countries. And it means that Chinese exhibitors and distributors have had no income, and smaller ones have gone bust.

“China suffered the permanent closure of at least 2,300 cinemas through the first two months of the COVID-19 industry shutdown and we expect that number to climb as local info is updated,” Rance Pow of Asian cinema investment and industry research consultant Artisan Gateway told Variety. Chinese authorities themselves have estimated that the gross box office will be reduced by some $4.2 billion (RMB30 billion) this year.

Many small production companies have also gone to the wall. In mid-April China’s Economic Daily, a paper backed by the country’s top administrative body, the State Council, said that 5,328 film and TV companies had disbanded so far in 2020. That was nearly double the number which folded in all of 2019.

In another new administrative measure, the finance ministry and the China Film Administration, announced that companies will not have to pay into the national film industry development fund between January and the end of August. For film companies in Hubei, the province that was the original epicenter of the disease, fund contributions are waived for the full year.