Preferential Tax Policies on For-profit Hospitals

The relevant person in charge of the Social Security Department of the Ministry of Finance replied to a reporter's question on the implementation of the "Opinions on Further Encouraging and Guiding Social Capital to Organize Medical Institutions" by the financial sector December 9, 2010 Source: China Business News The non-profit and for-profit medical institutions organized by the social capital can enjoy the same preferential tax policies as those of public medical institutions; encouragement of the government at all levels to purchase the services provided by the non-public medical institutions ; strengthening the grassroots and building mechanisms, the central government recently allocated 550 million yuan in subsidies, specifically for encouraging and guiding social capital to run medical institutions. On November 26, the General Office of the State Council issued the Opinions on Further Encouraging and Guiding Social Capital to Run Medical Institutions (hereinafter referred to as the "Opinions"), which specifies relevant policies and measures in four aspects: access, practice, supervision and development of medical institutions run by social capital. Ministry of Finance Social Security Department responsible person recently answered our reporter's questions, said that the next step, financial departments at all levels will conscientiously implement the spirit of the "Opinions", to further improve and implement the various financial and tax incentives, increase investment, continue to support social capital to organize medical and health institutions, to promote its sustained and healthy development, and to promote the social forces for the development of our country's health care to make a new and greater contribution. Social medical enjoy a series of fiscal and tax incentives According to the person in charge of the introduction, the "Opinions" put forward in the tax management, government investment, institutional access, nature of the change and exit, etc., social capital organized by the medical institutions can enjoy a series of preferential policies. First, in terms of tax management, the Opinions require the implementation of tax policies for non-public medical institutions. Non-profit medical institutions organized by social capital can enjoy the same preferential tax policies as public medical institutions: First, the medical service income obtained in accordance with the state price is exempted from all taxes. Secondly, for the part of non-medical service income obtained by them that is directly used to improve the conditions of medical and health services, the taxable income can be deducted upon examination and approval by the tax authorities, and the enterprise income tax will be levied on the balance of the income. Thirdly, it is exempted from value-added tax (VAT) on its self-produced preparations for self-use. Fourth, property, land, vehicles and vessels for their own use are exempted from property tax, urban land use tax and vehicle and vessel use tax. Fifth, donations to non-profit medical institutions organized by social capital are encouraged, and those in compliance with tax laws and regulations are entitled to relevant tax preferential policies. For the provision of medical services by for-profit medical institutions organized by social capital, they can enjoy the following tax incentives: First, they are exempted from business tax. Secondly, within 3 years, the value-added tax (VAT) on their self-produced preparations for self-use shall be exempted. Third, within three years, property, land, vehicles and vessels for their own use are exempted from property tax, urban land use tax and vehicle and vessel use tax. In addition, in terms of access to the organization, the Opinions require the tax and other departments to clarify the nature of business according to the purpose of its operation, register it in accordance with the law, implement relevant policies, and categorize it for management. With regard to the change and withdrawal of the nature of the organization, the Opinions stipulate that: the for-profit medical institutions organized by social capital shall be converted into non-profit medical institutions, and the relevant national price and tax policies shall be implemented according to the regulations after completing the change procedures in accordance with the law; if the property right of the non-public medical institutions is changed, it is permissible to recover the relevant investment for the ones that have already been held for a long time; and the non-public medical institutions shall be closed down or go bankrupt in accordance with the relevant national regulations. Secondly, in terms of government input, the Second, in terms of government investment, the Opinions encourage governments at all levels to purchase services provided by non-public medical institutions. First, governments at all levels are encouraged to adopt specific methods such as bidding and purchasing to select qualified non-public medical institutions to provide public **** health services as well as to undertake government-issued tasks such as support for agriculture, border support, and counterpart support, and to use the purchase of services to be appropriately subsidized. Secondly, in the event of major public **** health emergencies, natural disasters, accidents, epidemics and other critical situations, non-public medical institutions are required to carry out the directive tasks issued by the government, and the government will compensate them in accordance with the regulations. Third, to encourage conditional places in the construction of housing, equipment purchases and personnel training, etc., to non-public medical institutions to give positive support. Taxes as a good "leverage" should also do a good job of supervision The person in charge said, "Opinions" on the improvement of the government's health investment mechanism puts forward new and higher requirements. First, the implementation of fiscal preferential policies, give full play to the economic leverage of fiscal policy. Opinions" further clarifies the government of social capital to organize medical institutions of the various tax incentives, also puts forward the conditions of the place in the construction of housing, equipment purchases and personnel training and other aspects of the non-public medical institutions to give support to help guide and drive more social resources into the development of health care, and gradually improve its own development capacity, enhance its competitiveness in the health care services market. Financial departments at all levels should earnestly implement, increase financial and tax support, and effectively create a relaxed financial and tax environment for private medical and health institutions. Secondly, to change the way of government investment, and vigorously implement the purchase of services. The Opinions suggest that governments at all levels should be encouraged to purchase services provided by non-public medical institutions. This means that the government must continue to increase the demand-side subsidies, through the basic public **** health funding mechanism and the various medical insurance funds, in the medical and health services market at a fair and reasonable price to buy basic medical and health services provided by public and private medical and health institutions, so that public and private medical and health institutions through competition to provide relatively cost-effective services to obtain the corresponding compensation, so as to provide a fair and reasonable price for the development of public and private medical and health institutions, so as to provide a fair and reasonable price for the development of public and private medical and health institutions. This will provide a fair environment for the development of public and private medical and health care institutions. Third, to improve the financial system and regulate financial behavior. The Opinions suggest that non-public medical institutions should implement the financial accounting system stipulated by the state, and carry out accounting and financial management in accordance with the law. The next step is to further study and improve the financial accounting system of non-public medical and healthcare institutions, to promote the standardization of financial management of non-public medical and healthcare institutions, and to facilitate the government, investors and society to strengthen supervision. Fourth, vigorously strengthen supervision and management. The Opinion proposes to strengthen the supervision of the operating behavior of non-public medical institutions, and strictly prohibit the balance of income and expenditure of non-profit medical institutions organized by social capital to be used for dividend distribution or dividend distribution in disguise, so as to ensure their non-profit business purpose. At the same time, the role of accounting firms in auditing and supervising non-public medical institutions should be brought into full play in order to guide the healthy and sustainable development of non-public medical institutions. In the future, finance departments at all levels, in conjunction with health and other relevant departments, will implement preferential policies to encourage and guide the development of social capital to run medical institutions on the one hand, and strengthen supervision and inspection to standardize operation and management on the other hand, in accordance with the law. New initiatives focus on strengthening the grassroots, building mechanisms According to the person in charge of the introduction, in order to implement the "Opinions", the central government has recently allocated 550 million yuan of subsidies, specifically for encouraging and guiding the social capital to run a medical practice. First, from the perspective of "strengthening the grassroots", arrange 440 million yuan to support the social forces organized by the community health service centers and township health centers equipment purchase, maintenance and renovation and personnel training, the urban community health service centers at 100,000 yuan each, township health centers at 200,000 yuan each subsidy to support the social forces organized by the grass-roots level of health care institutions to improve service conditions and enhance service capacity. The subsidies are provided to urban community health centers at RMB 100,000 per center and township health centers at RMB 200,000 per center to support social forces in organizing primary medical and health care institutions to improve their service conditions and enhance their service capacity, so as to make it convenient for the grass-roots people to see a doctor close to them. Secondly, from the perspective of "building mechanisms", RMB 110 million has been allocated to support the development of a mechanism for the division of work and collaboration between public hospitals and primary medical and healthcare institutions, including those organized by social capital. In addition, since 2010, the social forces organized by the tertiary hospitals into the central financial subsidies for the construction of key clinical disciplines, non-public medical institutions will be further optimized scientific research and academic environment to achieve equal treatment with public medical institutions.