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Circular on Tax Policies for Small Loan Companies

Document No.:Cai Shui [2017] No. 48

Taxes:Value-added Tax,Comprehensive Taxation,Administration of Tax Levy & Collection

Date of Promulgation:

IssueDepartment:Ministry of Finance,State Administration of Taxation

Date of Implementatio:2017-06-09


Finance Departments (Bureaus), State Taxation Bureaus and Local Taxation Bureaus of all provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state budgetary plan and Finance Bureau of Xinjiang Production and Construction Corps,

To make small loan companies play an active role in helping “San Nong” (agriculture, farmers and rural areas) and small and micro businesses and better serve the development of the real economy,relevanttax polices for small loan companies are hereby notified as follows:

Article I From January 1st, 2017 to December 31st, 2019, the small loan companies,   which are established upon approvalby the finance administrative departments at the provincial level (finance offices or bureaus), shall be exempted from the VAT imposed on their interest income fromthesmall loans granted to farm households. 

Article II From January 1st, 2017 to December 31st, 2019, whenwecalculate the taxable income of the interest income from small loans granted to farm households obtained by the small loan companies established upon the approval of the finance administrative departments at the provincial level (finance offices or bureaus), 90% of the interest income shall be included in the total income amount.

Article III From January 1st, 2017 to December 31st, 2019, the loan loss provisions of the small loan enterprises established upon the approval of the finance administrative departments at the provincial level (finance offices or bureaus) calculated and withdrawn according to 1% of the loan balance at the end of the year are allowed to be deducted before the payment of the enterprise income tax. For specific policy specifications, the Circular of the Ministry of Finance and the State Administration of Taxation on the Policies Concerning Deducting the Loan Loss Provisions of Finance Enterprises before the Payment of the Enterprise Income Tax (Cai Shui [2015] No. 9) shall be implemented.

Article IV The farm households mentioned in the circular refer to the residents living in township administrative areas (exclusive of Chengguan towns) for a long term (more than one year), residents living in administrative villages under the jurisdiction of Chengguan towns for a long term and those whose registered households are not here but who live in the locality for more than one year as well as staff of state-owned farms and rural individual businesses. The institutional households of state-owned organs, groups, schools, enterprises and institutions located in the township administrative areas (exclusive of Chengguan towns) and in the administrative villages under the jurisdiction of Chengguan towns and the residents with local registered households, whose whole family make a living in other place for more than one year, no matter whether they keep the contracted land or not, do not belong to the scope of farm households. With the household as the statistic unit, farm households can participate in both agricultural and non-agricultural production and operation. The determination of the loan granted to a farm household shall be subject to the fact whether the loan subject is a farm household or not at the time of granting loans.

The small loan mentioned in the circular refers to the single loan and the total loan balance of the farm household lower than 100,000 yuan (inclusive of the figure itself).

Article V The VAT levied & collected from January 1st, 2017 to the issuance date of the circular, which should have been exempted, can offset taxpayers’ VAT payable in subsequent months or be refunded.


The Ministry of Finance and the State Administration of Taxation

June 9th, 2017

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