With the approval of the State Council, on June 24, the Ministry of Finance and the National Development and Reform Commission jointly issued a notice (Cai Shui [2008] No. 81) regarding tax policies applicable to farmer professional cooperatives, announcing the relevant tax policies for such cooperatives.
1. The sale of agricultural products produced by members of farmer professional cooperatives by the cooperatives themselves shall be treated as sales of self-produced agricultural products by agricultural producers and shall be exempt from value-added tax.
II. General VAT taxpayers may deduct the input VAT amount on tax-exempt agricultural products purchased from farmer specialized cooperatives at a deduction rate of 13%.
3. Value-added tax is exempted on agricultural films, seeds, seedlings, fertilizers, pesticides, and agricultural machinery sold by farmer professional cooperatives to their members.