China Enacts New VAT Law Effective January 2026, Incorporates OECD Guidelines

• China enacted a new VAT law
• The law was passed by the National People’s Congress on December 25, 2024
• This is the third draft of the VAT law
• The law maintains the existing VAT regime and does not increase the tax burden
• Changes include adjustments in taxable acts, tax jurisdiction, and deemed sales
• Non-taxable items, simplified taxation, and withholding agents are also addressed
• Updates on input taxes, non-creditable input taxes, mixed sales, and input credit carry-forward and refund
• The law incorporates OECD international VAT/GST guidelines
• It includes a place of consumption approach for determining the place of supply in China
• Allows refunds for excess input VAT credits
• The VAT law will be effective from January 1, 2026

Source: kpmg.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.

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