- China released draft VAT implementation regulations effective January 1, 2026, consolidating existing rules to enhance tax certainty and compliance, especially for foreign-invested enterprises.
- The draft clarifies when cross-border services and intangibles are taxable in China, allowing firms to specify consumption location in contracts to avoid unexpected VAT.
- Exported services such as R&D, design, IT outsourcing, and technology transfers will qualify for zero-rated VAT, improving predictability and compliance for service exporters.
- A new VAT deduction mechanism allows immediate or upfront input VAT credits for capital investments, simplifying planning and boosting ROI for manufacturers and infrastructure investors.
- The regulations standardize VAT exemptions, tighten invoice rules, and centralize cross-province filings, requiring companies to update tax strategies, contracts, and internal controls.
Source: ggi.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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