The Ministry of Culture issued the Wen-Shou-Zi-Ju-Zong-10730081351 Circular of July 25, 2018 (hereinafter, the “Circular”) to communicate that if a public enterprise is set up pursuant to the Company Law, Article 99 of the Cultural Heritage Preservation Law, which grants tax exemption to the public enterprise’s property designated or registered as cultural heritage, also applies immediately. Other circulars from the Ministry of Culture which run counter to this Circular should no longer apply.
This Circular first points out that Article 8, Paragraph 1 of the Cultural Heritage Preservation Law provides: “The public cultural assets under this Law shall refer to cultural assets owned by the state, local self-governing bodies, and other public institutions or public enterprises.” This provision seeks to strengthen the preservation of public cultural heritage by extending the concept of “public ownership” to the “management” of cultural heritage and is not always determined based on ownership. Instead, the public interest nature of cultural heritage preservation is considered. Therefore, it is stipulated that “cultural heritage owned by public enterprises” also fall within the scope of “public ownership.” In addition, the owners or management agencies (institutions) are specifically required to prepare a budget to assume the responsibilities for preservation, restoration, management and maintenance. As for private historic relics, archaeological sites, historic buildings, memorial buildings, settlement complexes, historic sites and cultural landscapes which have been designated or registered, their rights holder are subject to many restrictions in the exercise of their rights. Therefore, Article 99 of the Cultural Heritage Preservation Law provides that relevant taxes on such private cultural heritage and the lands where they are located may be exempt to encourage the people (including private juristic persons) to participate in cultural preservation. This is different from the legislative objective of Article 8 of the above Cultural Heritage Preservation Law, which aims to enhance the preservation of public cultural heritage.
However, as this Circular further pointed out, a public enterprise set up pursuant to the Company Law is a private juristic person and only its shares are public property. Its assets, including designated or registered cultural heritage, are still property owned by the private juristic person in nature. Except as otherwise stipulated by law, a public enterprise shall have the same rights and obligations as the same category of private enterprises (compare Article 6 of the Law for the Administration of State-owned Enterprises). Therefore, Article 99 of the Cultural Heritage Preservation Law grants tax exemption for assets of private individuals (including private juristic persons) which are designated or registered as cultural heritage. The determination of public or private property should certainly be interpreted in the same way as other tax exemption laws and regulations such as the Land Tax Act, the Land Tax Reduction and Exemption Regulations, and the Housing Tax Exemption Statute in order to reflect the legislative objectives of encouraging private individuals (including private juristic persons) to preserve cultural assets pursuant to such article. Therefore, this article should also apples to public enterprises set up pursuant to the Company Law.