Legal analysis: Income obtained by for-profit medical institutions is subject to all taxes in accordance with regulations. However, in order to support the development of for-profit medical institutions, the following preferences are given to the income obtained by for-profit medical institutions, which is directly used to improve the medical and health conditions, for a period of three years from the date of obtaining the registration of their practice:
(1) exemption from business tax on the income obtained from medical services;
(2) exemption from the value-added tax on the self-manufactured and self-used preparations;
(3) exemption from property tax on the property, land, vehicles and vessels used by for-profit medical institutions are exempted from property tax, urban land use tax and vehicle and vessel use tax, which will be resumed after the expiration of the three-year tax exemption period.
Legal basis: Circular of the Ministry of Finance and the State Administration of Taxation on Relevant Taxation Policies for Medical and Healthcare Institutions
I. Taxation Policies for Non-Profit Medical Institutions
(1) Non-profit medical institutions are exempted from all taxes on medical service revenues obtained in accordance with the prices stipulated by the state. Medical service income not obtained in accordance with the state price shall not enjoy this policy.
Medical services refer to the services of medical service organizations in examining, diagnosing, treating, rehabilitating and providing preventive health care, midwifery and family planning to patients, as well as the provision of medicines, medical materials and appliances, ambulances, ward accommodations and meals in connection with these services (hereinafter referred to as the same).
(2) Income derived by non-profit medical institutions from non-medical services, such as rental income, property transfer income, training income, foreign investment income, etc., shall be subject to various taxes in accordance with the regulations. Non-profit medical institutions will obtain non-medical services income, directly used to improve the conditions of medical and health services, can be approved by the tax authorities to offset their taxable income, the balance of the enterprise income tax levied.
(3) The value-added tax (VAT) is exempted on the preparations produced by non-profit medical institutions for their own use.
(4) The pharmacy of a non-profit medical institution separated into an independent pharmaceutical retail enterprise shall be subject to all taxes as stipulated.
(v) Property, land, vehicles and vessels used by non-profit medical institutions for their own purposes shall be exempted from property tax, urban land use tax and vehicle and vessel use tax.
II. Taxation Policies on For-Profit Medical Institutions
(1) All taxes shall be levied on the incomes obtained by for-profit medical institutions in accordance with the regulations. However, in order to support the development of for-profit medical institutions, the income obtained by for-profit medical institutions, which is directly used to improve medical and health conditions, will be given the following preferences for a period of three years from the date of obtaining the registration of practice: the income from medical services is exempted from the business tax; preparations produced for self-use are exempted from the value-added tax; property, land, vehicles and vessels used for self-use by the for-profit medical institutions are exempted from the property, land-use, urban and municipal use and vehicle and vessel use taxes for a period of three years. Taxation will be resumed after the expiration of the three-year tax exemption period.
(2) The pharmacy of a for-profit medical institution shall be separated into an independent pharmaceutical retail enterprise, and all taxes shall be levied in accordance with the regulations.