- China has approved a new Value-Added Tax law effective from January 1, 2026
- The law was passed during the National People’s Congress Standing Committee session on December 25
- This new legislation consolidates existing VAT regulations into a single framework
- VAT is the largest tax category in China, making up about 38% of the national tax revenue in 2023
- The law is part of efforts to implement statutory taxation and covers 14 out of 18 tax categories in China
- Exemptions in the VAT law include certain agricultural products, imported scientific research equipment, and services related to welfare institutions
- The government can adjust tax deductibles to support specific sectors or businesses
- China’s economy is currently challenged by weakening domestic demand, with a 4.7% drop in VAT revenue in the first 11 months of 2024
- There was a slight recovery in VAT revenue in November 2024, indicating potential economic improvement
- Previous VAT reforms include rate cuts in 2019 and tax incentives in 2023 to support industries like property and research institutions
Source: tribuneonlineng.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.
