1. Background of improving the tax policy for private schools

Prior to the promulgation of the amendments to the Law on the Promotion of the People, the vast majority of private schools were registered as private non-enterprise legal persons with the civil affairs department. Compared with public schools registered as legal persons of public institutions, it is difficult for private schools to implement "the same legal status as public schools" in terms of institutional attributes, tax system, personnel management system, social insurance benefits, etc., resulting in de facto inequality between private schools and public schools. With the passage of the amendment to the Law on the Promotion of Democracy, the classified management of private schools for profit and non-profit has become a fait accompli, which has created more relevant policy vacancies and deficiencies on top of the less equal legal status. This paper will focus on the tax policy of private schools and discuss how to improve the tax policy after the introduction of classified management of private schools.

Second, the problems that existed before the introduction of the classification management policy

The tax policy problem of private schools is mainly reflected in the fact that private schools cannot enjoy the same tax exemption treatment as public schools. Even in practice, some local tax authorities apply the same standards as enterprises when collecting taxes and fees from private schools. These phenomena have increased the cost of running private schools and increased the burden of running private schools. The problem is manifested in the following two aspects.

First, the tax exemption policy does not apply. In the Notice on Issues Concerning the Administration of the Recognition of Tax-exempt Qualifications of Non-Profit Organizations (CS [2009] No. 123), which is used by private schools to formulate the tax system, the conditions for non-profit organizations to obtain tax-exempt qualifications include that "the investor does not retain or enjoy any property rights to the property invested in the organization". As a result of this provision, most private schools cannot pass the recognition of tax-exempt status and become the subject of enterprise income tax. Tax law enforcement officers only look at the financial statements of private schools to see whether there is a surplus in the operation of private schools, and if so, they will levy income tax on them in accordance with the tax collection and management measures for for-profit organizations. This practice reflects that in practice, the administrative authorities do not regard private schools as non-profit organizations, but as profit-making institutions, and collect taxes and fees with reference to the standards of enterprises.

Second, the non-docking of legal person status. In the past, private schools needed to pay cultivated land occupation tax, deed tax, business tax, value-added tax, etc. (many of which were exempt from public schools), which directly increased the cost of running private schools. The root cause of this performance lies in the fact that the status of private schools as "private non-enterprise units" is not in line with the classification of legal persons stipulated in the General Principles of the Civil Law of 1986. After the promulgation of the Law on the Promotion of Private Education in 2002, private education was characterized as a public welfare undertaking, stipulating that private schools should have the conditions of legal persons, but the attributes of legal persons were still not clarified. In practice, a "private non-enterprise" legal person means that it is not a "public institution" legal person, and the administrative department will treat the private school as an "enterprise" legal person, and the tax will be handled according to the enterprise regulations.

3. Supporting tax policy improvement measures for the classified management of private education

Public welfare is the basic attribute of education, and it is also the basic attribute of private education, so it is the responsibility of the government to support the development of private education. The forms of government support can be diversified, which can be not only financial support, but also preferential tax and land policies. Among them, the tax policy is an important policy means for the government to carry out macroeconomic regulation and guidance of private education, if private schools do not enjoy preferential policies such as tax exemption and exemption, it will affect their legitimate economic benefits, restrict the development of private schools, and suppress the enthusiasm of private funds to invest in education. Therefore, efforts to improve the tax policy are one of the ways to promote the sound and rapid development of private education. In order to promote the further development of private education, it is necessary to clarify the preferential tax policies for private schools on the basis of classified management:

First of all, after the introduction of the classified management policy, the government's support and methods should be different for non-profit private schools and for-profit private schools, and the specific tax policy preferences should also be different. Previously, the tax policy for private schools was one-size-fits-all, which caused many problems. After the implementation of classified management, the tax system should be adjusted and improved according to the nature of private schools, and the preferential tax policies for different types of private schools should be improved, and the preferential tax policies for non-profit and for-profit private schools should be relatively fair and conducive to their respective development, and different demands should be treated differently. Specifically, there are two points:

First, non-profit private schools funded by donations should be guaranteed to enjoy the same tax policies as public schools. Through classified management, private schools that choose non-profit schools can get more tax incentives. The ownership of the educational assets originally accumulated by non-profit private schools can remain unchanged, but the schools must be subject to government supervision, and the school income cannot become private income and cannot be used for dividends, but continue to be used for the development of private education. Encourage the public to donate to education, give income tax deduction concessions to individual donors or organizations, and establish a "donation tax credit" system (see Part IV: Taiwan's experience in domestic and foreign experience for details). Strengthen tax incentives for private education donations and financing, and promote the development of non-profit private schools.

Second, for-profit private schools should be reduced in business tax, enterprise income tax should also be preferential, and other taxes and fees should be paid in accordance with national regulations. The income obtained from the provision of educational services by for-profit schools engaged in academic education, as well as the income obtained from the provision of parenting services by for-profit private kindergartens, shall be exempted from business tax. For all kinds of legal income of for-profit schools, enterprise income tax shall be charged with reference to the tax rate of high-tech enterprises; No enterprise income tax shall be levied on the income of special subsidies for career development obtained by for-profit schools from competent departments and superior units. For the real estate and land used by for-profit schools and for-profit private kindergartens engaged in academic education, the collection of real estate tax and urban land use tax shall be reduced; For the real estate and land used by for-profit education and training institutions, the collection of real estate tax and urban land use tax shall be reduced. For for-profit schools that have been converted from existing private non-enterprise units to corporate enterprises, the collection of LAT and deed tax on the original campus land and school buildings shall be suspended without changing the nature of the educational land.

In addition to the above-mentioned policies that distinguish between for-profit and non-profit private schools, some preferential policies should also be clarified for the equal treatment of for-profit and non-profit private schools. For example, land and houses occupied by private schools are exempt from deed tax if they are used for teaching; The cultivated land requisitioned by the school with approval shall be exempted from the cultivated land occupation tax; Those who invest in the establishment of schools can be exempted from land appreciation tax and so on in accordance with regulations. These preferential policies do not distinguish between for-profit and non-profit private schools, as long as they meet the relevant conditions, they can enjoy the corresponding preferential tax policies. In addition, other taxes involved in the classified management of private schools should be deferred or halved during the transition period.

In short, the fundamental purpose of improving the tax system of private education is to guide and protect the public welfare to the greatest extent, support and standardize the development of private education, and encourage social forces and private capital to enter private education, so as to implement the requirements of the 13th Five-Year Plan, take the education service industry as a breakthrough in public services, and promote the upgrading of public services in the whole society.

Fourth, domestic and foreign experience for reference

After years of reform and development, the education system of some countries and regions at home and abroad has been quite mature, especially the classified management policy of private schools that China has just deliberated and adopted, which has been relatively mature in some areas, and some of these successful experiences are worth learning from.

In the more successful countries and regions, the private school policy is an organic whole. Taking the United States as an example, its taxation and accounting systems are set up separately according to the distinction of legal personality, stipulating that non-profit schools should be registered as non-profit organizations, and for-profit schools should be registered as enterprises, and two different sets of taxation, land use preferential policies, and accounting systems for non-profit organizations and enterprises should be implemented respectively, and the legal policy system is clear and clear. At the same time, the forms of financial assistance in these countries and regions are diverse, from the perspective of funding objects, generally only for non-profit private schools, from the perspective of funding methods, some countries and regions for private schools financial assistance is also completed by subsidizing students' tuition and living expenses, subsidizing teachers' salaries, etc., reflecting the "student benefit principle". In terms of admission criteria and autonomy, stricter standards have been set for non-profit schools, while for-profit private schools have been set up more relaxed, giving private schools greater autonomy than public schools.

In terms of tax incentives for donations. The U.S. government provides a legal guarantee for income and estate tax deductions for corporate or individual donations to education. Taiwan's related fields also have strengths: donations made by private individuals or enterprises to public schools in Taiwan are completely tax-deductible, 20% can be deducted if individuals donate to private schools, and up to 10% can be deducted by for-profit institutions; If you donate to a private school through the "Foundation for the Development of Private Schools", the deduction can reach 50% for individuals and 25% for for-profit institutions.

We can get some enlightenment from this, these successful practices, preferential policies such as classified management and taxation are based on strengthening external supervision and improving internal governance, so as to ensure that private schools can standardize and improve the quality of schooling.

About author:WANG Jian is an assistant researcher at Zhiyuan Institute of Education Investment and Management.