The Circular of the Ministry of Finance and the State Administration of Taxation on the Relevant Tax Policies for Medical and Healthcare Institutions (Cai Shui [2000] No. 42), Article 1, "Tax Policies for Non-Profit Medical Institutions" provides that (1) Non-profit medical institutions are exempted from all taxes on the income from medical services obtained in accordance with the prices stipulated by the State. Income from medical services not obtained in accordance with the prices stipulated by the state shall not be entitled to 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 services 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, and income from foreign investment 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 deduct their taxable income, the balance of the enterprise income tax.
(3) The value-added tax (VAT) is exempted on preparations produced by non-profit medical institutions for their own use.
(4) Pharmacies of non-profit medical institutions separated into independent pharmaceutical retail enterprises shall be subject to all taxes as stipulated.
(5) 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."
According to Article 2 of the Circular of the Ministry of Finance and the State Administration of Taxation on Relevant Taxation Policies for Medical and Healthcare Institutions, document Cai Shui [2000] No. 42 stipulates:
(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 following concessions shall be granted to the income obtained by for-profit medical institutions, which is directly used for the improvement of medical and health care conditions, within 3 years from the date of obtaining the registration of practice: the income from medical services is exempted from the business tax; the preparations for self-production and self-consumption are exempted from the value-added tax; and the real estate, land, vehicles and vessels for self-consumption of for-profit medical institutions are exempted from the property tax, the urban land-use tax and the vehicle and vessel use tax for 3 years. The tax 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.