It is understood that the tax rules for venture capital funds are based on the Notice on Income Tax Policies for Individual Partners of Venture Capital Enterprises issued by the Ministry of Finance in June 20 19. At present, there are two tax methods, 20% tax rate or cross-year carry-over.

First, accounting according to a single investment fund: within one year, if the profit and loss balance of different investment projects is greater than zero, it will be taxed at the tax rate of 20%; Dividend income, if any, is also taxed at the rate of 20%.

2. Overall accounting by annual income: This accounting method actually regards venture capital funds as "individual industrial and commercial households" and pays taxes in a way similar to "individual industrial and commercial households".

At present, most venture capital funds in China adopt limited partnership system and implement the principle of "distribution first and then tax payment", that is, there is no need to pay enterprise income tax at the fund level, and fund partners pay taxes separately when they get share income.

However, according to the requirements of the current tax law, after the partnership has made profits in that year, whether it is actually distributed to the partners or not, it must be taxed according to the part distributed to the partners. If the partnership suffers losses, the losses can only be deducted from the profits, but not from the profits of previous years. The general feature of venture capital funds is to make profits first and then lose money. In this way, the tax must be paid in the profit-making year and cannot be deducted after entering the loss-making year, so the actual tax burden may be much higher than the statutory tax rate.

To this end, the industry has been calling on venture capital funds to pay taxes in accordance with "life cycle accounting", but there has been no relevant policy.