China Economic Review
Charting China’s changing economic terrain · Since 1990
China ends tax breaks on tobacco advertising
August 13, 2009
Further to our item Anti-smoking campaign hampered somewhat, which suggested the government is hampered in banning smoking because of internal links, comes the news that Chinese tobacco companies have been banned from claiming tax breaks on advertising, promotional and sponsorship spending.In a joint circular issued coinincidentally this week, but backdated to January 1 last year, the Ministry of Finance (MOF) and the State Administration of Taxation (SAT) declared an end to tax breaks on promotional spending for tobacco firms.
The circular is effective until December 31, 2010, after which all forms of tobacco promotion will be banned in China.
China Daily reports the new provision means tobacco companies will have to pay more tax. Zhang Bin, an expert on price and tax studies with the Chinese Academy of Social Sciences said that as a result their after-tax profits will drop, indicating the government is taking a tougher stance to curb smoking.
Xu Guihua, vice president and secretary general of the Association on Tobacco Control, said a comprehensive ban on tobacco advertising, promotion and sponsorship will come into force in 2011. None of which will be enough, but certainly these are steps in the right direction.