China’s First Formal VAT Law Introduces Major Changes, Effective January 2026

• China released its first official VAT Law on December 25, 2024, effective January 1, 2026
• The law aims to strengthen the existing VAT system, which accounted for 38 percent of tax revenue in 2024
• Key changes include shifting the sourcing rule for services to the place of consumption and clarifying VAT rules for financial products
• The law refines deemed sales, limiting them to specific scenarios
• Article 15 imposes tax withholding obligations on buyers in foreign e-commerce unless a domestic agent is involved
• This suggests potential future VAT registration for non-resident sellers
• Further regulations from the Ministry of Finance and State Taxation Administration are expected
• Businesses should monitor updates to ensure compliance with the new VAT Law

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.

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