China has implemented major adjustments to its VAT credit refund system, marking the most significant overhaul in over a decade. These changes were jointly announced by the Ministry of Finance and the State Taxation Administration on August 22.
Highlights:
- Targeted Refunds: The new policy focuses on strategic sectors, shifting from broad-based support to more precise fiscal interventions.
- Cash Flow Boost: Eligible businesses can now receive cash refunds for unused input VAT credits, rather than carrying them forward indefinitely.
- Sector Expansion: Industries such as wholesale, retail, agriculture, accommodation, and catering are now included in the refund scheme.
- Monthly Refunds: Newly accrued VAT credits will be refunded monthly, while outstanding credits will be refunded in one lump sum.
Why It Matters:
This move is part of China’s broader strategy to stimulate economic recovery, support market vitality, and optimize fiscal sustainability. It’s especially relevant for businesses navigating post-pandemic challenges and planning their tax strategies.
You can dive deeper into the details on Yuan trends or check the official government release from China’s State Tax Administration.
China Announces New VAT Refund Policy Effective September 2025 for Eligible Taxpayers
- New VAT refund policy in China effective from September 2025
- Eligible VAT taxpayers can apply for refunds of unused tax credits
- Announcements No. 7 and No. 20 of 2025 detail the policy and implementation
- Eligible industries include manufacturing, scientific research, software, IT services, environmental management, and real estate development
- Real estate industry can apply for a 60 percent refund if certain conditions are met
- Other industries can apply for proportional refunds with specific criteria
- Taxpayers must have a tax payment credit level of A or B and no history of fraudulent activities
- Exporters must apply for tax exemption and refund before applying for retained tax refund
Source: regfollower.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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