Legal analysis: only public hospitals have tax deductions. Profit-making medical income is not exempt. The state's public hospitals are not taxable and are exempt from business tax, value-added tax and enterprise income tax, but they have to fulfill the obligation of withholding and paying individual income tax. Private hospitals: exempted from business tax, VAT, but to the investor personal income tax, but also to fulfill the obligation of personal income tax withholding and payment.
Legal basis: Article 26 of the Law of the People's Republic of China on Enterprise Income Tax: The following income of an enterprise is exempted from tax: (a) interest income from treasury bonds; (b) dividends, bonuses and other equity investment income between qualified resident enterprises; (c) non-resident enterprises that have set up institutions and establishments in China to obtain from a resident enterprise dividends that have a real connection with the institution or establishment, dividends and other equity investment income; (iv) income from qualified non-profit organizations.