- China’s National People’s Congress passed the new Value-Added Tax Law on December 25, 2024, effective from January 1, 2026
- VAT is the largest tax source in China, making up 38% of total national tax revenue with RMB 6.9 trillion collected in 2023
- China’s VAT system started in 1994 and has seen major reforms including replacing business tax with VAT
- The new VAT Law maintains current rates and structures but includes exemptions for agricultural products and services by welfare institutions
- The law aims to support China’s economic strategies and address the recent decline in VAT revenue which suggests a slowing economy
- Businesses will need to prepare for changes in VAT compliance with expected support from policymakers
- China now has specific laws for 14 out of 18 tax categories, showing progress in fiscal governance
- Businesses and fiscal solution providers should stay updated on VAT Law details to adapt effectively
- Fiscal Solutions offers assistance with tax system navigation and integration into POS systems for businesses operating in China
Source: fiscal-requirements.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.
