- China has officially 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
- It consolidates existing regulations into a single legal framework
- VAT is the largest tax category in China, making up about 38% of national tax revenue in 2023
- The new law codifies tax policies and is a step towards implementing statutory taxation
- With this law, 14 out of 18 tax categories in China now have their own laws
- The law includes exemptions for certain agricultural products, imported scientific research equipment, and services related to welfare institutions
- The government can expand tax deductibles to support specific sectors or businesses
- China’s economy faces challenges with weakening domestic demand
- VAT revenue fell by 4.7% year-on-year to 6.1 trillion yuan in the first 11 months of 2024 but showed a rebound in November
- The VAT rebound indicates improving economic vitality and a potential recovery in industrial profits
- Earlier VAT reforms included rate cuts in 2019 for manufacturers and certain sectors
- Tax incentives in 2023 were introduced to support struggling industries and research institutions with exemptions and refund extensions through 2027
Source: zawya.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.
