The input VAT on the loan cannot be deducted.

"Notice of the Ministry of Finance and the State Administration of Taxation on Comprehensively Launching the Pilot Program of Replacing Business Tax with Value-Added Tax" (Caishui [2016] No. 36): Attachment 1: "Implementation Measures for the Pilot Program of Replacing Business Tax with Value-Added Tax":

Article 27 The input tax on the following items shall not be deducted from the output tax:

(1) Items used for tax calculation using the simple tax calculation method and items exempt from value-added tax , purchased goods, processing, repair and repair services, services, intangible assets and real estate for collective welfare or personal consumption. The fixed assets, intangible assets and real estate involved only refer to the fixed assets, intangible assets (excluding other equity intangible assets) and real estate dedicated to the above projects.

Taxpayers’ social and entertainment consumption belongs to personal consumption.

(2) Purchased goods with abnormal loss, as well as related processing, repair, repair and transportation services.

(3) Purchased goods (excluding fixed assets), processing, repair and repair services and transportation services consumed by abnormal losses of products in progress and finished products.

(4) Real estate with abnormal loss, as well as purchased goods, design services and construction services consumed by the real estate.

(5) Purchased goods, design services and construction services consumed by real estate projects under construction due to abnormal losses.

The taxpayer’s new construction, reconstruction, expansion, repair, and decoration of real estate are all real estate projects in progress.

(6) Purchased passenger transportation services, loan services, catering services, daily resident services and entertainment services.

(7) Other circumstances specified by the Ministry of Finance and the State Administration of Taxation.