1. Report Industry Investment Rating - Not provided in the text 2. Core Viewpoints of the Report - The restoration of VAT on the interest income of newly issued government bonds, local government bonds, and financial bonds from August 8, 2025, may lead to various changes in the bond market and asset allocation, including potential preferences for old bonds, the popularity of credit bonds, changes in treasury bond futures spreads, and long - term rebalancing of stock - bond assets [2][3] - The policy change is based on considerations such as unifying the tax system, increasing tax sources, optimizing bond market stratification, preventing capital idling, and guiding long - term funds to increase equity allocation [6] 3. Summary According to Relevant Catalogs 3.1 Policy's Past and Present and Institutions' Bond Tax Rate Burden - The policy on VAT exemption for the interest income of government bonds, local government bonds, and policy - financial bonds has gone through three stages: the initial stage (90s - 2016) with exemption from business tax, the transition stage (2016 - 2025) with exemption from VAT, and the turning stage (2025) with the restoration of VAT collection [6][7] - The current reform only targets VAT on interest income and does not involve negotiable certificates of deposit, railway bonds, and credit bonds. From the perspective of the overall asset management and proprietary business ecosystem, the bond tax rate burden from low to high is public funds, other asset management institutions, and proprietary institutions. Public funds and other asset management institutions enjoy a 3% "half - levy" VAT rate on interest income [11] 3.2 Hints in the First - Quarter Monetary Policy Report and Echo of the Anti - Involution Policy - The central bank has been aware of potential interest rate risks since the first quarter and has carried out phased regulation of the bond bull market. The bond market has problems such as liquidity stratification, short - term trading by some institutions, and the popularity of long - term active government bonds. The new tax policy aims to improve bond market trading rules, support the real economy, and stabilize long - term interest rate fluctuations [13][15] - After the "anti - involution" policy this year, the commodity market has moved up, and the treasury bond futures market has had a correction. The bond market may show a volatile and bearish trend in the second half of the year [16] 3.3 Impact on the Market - After August 8, new bonds will have interest rate compensation, and old bonds will be more popular. The market may adopt a "long old bonds, short new bonds" strategy. The CTD of old bonds corresponding to active contracts may have a supplementary increase, but the medium - term trend is difficult to change. The basis will fluctuate to a reasonable range [18] - The inter - delivery spread of treasury bond futures may widen further, and the curve may steepen in the medium term [18] - Credit bonds may be favored in the short term, and the stratification of credit bonds and credit spreads will be more reasonable in the medium term, attracting capital inflows to support the real economy [18] - The tax on interest - rate bonds indirectly benefits equity assets, but short - term discount expectations of bond - related assets of some companies need to be noted [19]

Core Viewpoint - The recent policy change reinstates the value-added tax (VAT) on interest income from newly issued government bonds, local government bonds, and financial bonds starting from August 8, but provides a tax exemption for individual investors under certain conditions [1] Group 1: Tax Policy Changes - The State Taxation Administration has issued a guideline indicating that individuals purchasing government bonds and similar securities will be exempt from VAT on interest income if their monthly sales do not exceed 100,000 yuan [1] - The exemption applies to a quarterly sales limit of 300,000 yuan, allowing individuals to benefit from this tax relief [1] - This tax exemption policy is set to remain in effect until December 31, 2027, with future extensions yet to be determined [1]

Core Viewpoint - The Ministry of Finance and the State Taxation Administration of China announced a new policy regarding the value-added tax (VAT) on interest income from government bonds, local government bonds, and financial bonds, effective from August 8, 2025 [1] Summary by Category Tax Policy Changes - Starting from August 8, 2025, interest income from newly issued national bonds, local government bonds, and financial bonds will be subject to VAT [1] - Interest income from bonds issued before this date will continue to be exempt from VAT until the bonds mature [1] Definition of Financial Bonds - Financial bonds refer to securities issued by legal financial institutions established in China, which are held by financial institutions and are repayable with interest as agreed [1]

Core Viewpoint - The announcement from the Ministry of Finance and the State Taxation Administration outlines the restoration of value-added tax (VAT) on interest income from newly issued government bonds, local government bonds, and financial bonds starting from August 8, 2025, while maintaining VAT exemption for bonds issued before this date until maturity [3]. Group 1 - From August 8, 2025, interest income from newly issued national bonds, local government bonds, and financial bonds will be subject to VAT [3]. - Interest income from bonds issued before August 8, 2025, will continue to be exempt from VAT until the bonds mature [3]. - Financial bonds refer to securities issued by legally established financial institutions in China, which are held by these institutions and pay principal and interest as agreed [3].

Core Points - The Ministry of Finance and the State Taxation Administration announced a new tax policy regarding interest income from government bonds and other financial bonds, effective from August 8, 2025 [1] - From this date, interest income from newly issued government bonds, local government bonds, and financial bonds will be subject to value-added tax (VAT) [1] - Interest income from bonds issued before this date will continue to be exempt from VAT until the bonds mature, including portions issued after August 8, 2025 [1] - Financial bonds are defined as securities issued by financial institutions legally established in the People's Republic of China, which are held by these institutions and pay principal and interest as agreed [1]

Core Viewpoint - The Ministry of Finance and the State Taxation Administration announced the resumption of value-added tax (VAT) on interest income from newly issued government bonds, local government bonds, and financial bonds starting from August 8, 2025 [1][2]. Summary by Relevant Sections - **Tax Policy Changes** - From August 8, 2025, interest income from newly issued national bonds, local government bonds, and financial bonds will be subject to VAT [2]. - Interest income from bonds issued before this date will continue to be exempt from VAT until maturity [2]. - **Definition of Financial Bonds** - Financial bonds refer to securities issued by financial institutions legally established in the People's Republic of China, which are held by these institutions and pay principal and interest as agreed [2]. - **Announcement Details** - The announcement was made by the Ministry of Finance and the State Taxation Administration on July 31, 2025 [4].

Key Points - The announcement states that starting from August 8, 2025, value-added tax (VAT) will be reinstated on interest income from newly issued national bonds, local government bonds, and financial bonds [3][5] - Interest income from bonds issued before August 8, 2025, will continue to be exempt from VAT until the bonds mature [3][5] - Financial bonds are defined as securities issued by legally established financial institutions in China, which are held by financial institutions and repay principal and interest as agreed [3][5]

Core Viewpoint - The Ministry of Finance and the State Taxation Administration announced a policy change regarding the value-added tax (VAT) on interest income from government bonds, local government bonds, and financial bonds, effective from August 8, 2025 [1] Group 1: Tax Policy Changes - Starting from August 8, 2025, interest income from newly issued government bonds, local government bonds, and financial bonds will be subject to VAT [1] - Interest income from bonds issued before August 8, 2025, will continue to be exempt from VAT until the bonds mature, including portions issued after this date [1] Group 2: Definition of Financial Bonds - Financial bonds are defined as securities issued by legal financial institutions established within the People's Republic of China, which are held by financial institutions and repay principal and interest as agreed [1]

Core Viewpoint - The Ministry of Finance and the State Taxation Administration announced a new policy regarding the value-added tax (VAT) on interest income from government bonds, local government bonds, and financial bonds, effective from August 8, 2025 [1][2]. Summary by Sections Tax Policy Changes - Starting from August 8, 2025, interest income from newly issued government bonds, local government bonds, and financial bonds will be subject to VAT [1]. - Interest income from bonds issued before this date will continue to be exempt from VAT until the bonds mature [1]. Definition of Financial Bonds - Financial bonds are defined as securities issued by legally established financial institutions in the People's Republic of China, which are held by financial institutions and are subject to agreed repayment and interest payment [1].

Group 1 - The announcement states that starting from August 8, 2025, interest income from newly issued national bonds, local government bonds, and financial bonds will be subject to value-added tax (VAT) [1] - Interest income from bonds issued before August 8, 2025, will continue to be exempt from VAT until the bonds mature [1] - Financial bonds refer to securities issued by legally established financial institutions in the People's Republic of China, which are held by financial institutions and repay principal and interest as agreed [1]