- The Value-Added Tax Law of the People’s Republic of China was passed on December 25, 2024, by the Standing Committee of the 14th National People’s Congress during its 13th session
- The law will be implemented starting January 1, 2026
- The law aims to establish a robust VAT system conducive to high-quality development, regulate VAT collection and payment, and protect the legal rights of taxpayers
- VAT applies to transactions within China involving the sale of goods, services, intangible assets, real estate, and imports by units and individuals including sole proprietors
- Taxable transactions within China include sales where goods originate or are located within China, sales or leases of real estate or natural resource rights located within China, sales of financial products issued within China or by domestic entities, and sales of services or intangible assets consumed within China or by domestic entities
- Certain non-monetary transactions by units and sole proprietors such as using self-produced or processed goods for collective welfare or personal consumption, and gratuitous transfers of goods, intangible assets, real estate, or financial products are treated as taxable
- Transactions not subject to VAT include services provided by employees for wages, administrative fees, government funds, legally mandated compensations, and interest income from deposits
- VAT is an indirect tax and should not be included in the sales amount of taxable transactions; it must be separately listed on transaction documents as per regulations set by the State Council
Source: lexiscn.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
