China’s New VAT Law: Major Changes and Implications for Businesses Starting 2026

• VAT Law in China was promulgated on 25 December 2024 and will take effect on 1 January 2026
• VAT is the largest source of tax revenue in China, contributing 38 percent in 2024
• The new VAT Law aims to reinforce taxation according to the law
• Key changes include shifting the criterion for services and intangible properties to place of consumption
• Financial products are considered sold within China if issued domestically or by a domestic entity
• The scope of deemed sales rules is narrowed with fewer specified scenarios
• The VAT Law does not automatically repeal previous VAT rules, further regulations may be needed
• Article 15 designates the purchaser as the withholding agent for foreign e-commerce businesses
• Future regulations may require non-resident e-commerce companies to register and pay VAT
• Companies should monitor forthcoming regulations for impacts on VAT compliance

Source: law.asia

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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