China Reimposes VAT on Government, Local Government, and Financial Bonds: Key Impacts and Insights

• VAT will be reinstated on interest income from newly issued government, local government, and financial bonds starting 8 August 2025.
• Interest income from bonds issued before this date will remain VAT-exempt until maturity.
• Financial institutions must distinguish between existing and newly issued bonds for VAT purposes.
• Announcement 4 defines financial bonds as securities issued by financial institutions within China, repaying principal and interest as agreed.
• Institutions need to assess investment products to determine VAT applicability.

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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