China’s Unified VAT Reform: Modernizing Tax Compliance for Domestic and Foreign Businesses

China transitioned from a dual Business Tax (BT) and VAT regime to a unified VAT system, with the new VAT Law effective January 1, 2026.
The reform modernizes the tax framework, broadens the tax base, reduces fraud through technology, and aligns with international standards.
The new VAT Law and digital e-fapiao clarify compliance for domestic and foreign businesses, especially for cross-border transactions and digital platforms.
VAT reforms address fiscal relationships between central and sub-national governments, aiming for greater efficiency and transparency.
The shift supports China’s move from a manufacturing-based to a consumption-based tax system, enhancing economic development and tax enforcement.

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.