- Implementation of VAT Law: The Detailed Implementation Regulations (DIRs) of the Value-Added Tax (VAT) Law in China were adopted on December 19, 2025, and will take effect on January 1, 2026. The changes are minimal compared to the previous Consultation Draft, focusing on clarifications regarding non-taxable transactions and adjustments to filing deadlines.
- Key Changes in Taxation: Significant updates include the taxation of certain cross-border transactions involving overseas sellers, adjustments in defining “entirely consumed overseas” for zero-rate eligibility, and new withholding obligations for enterprises dealing with individual sellers in C2B transactions.
- New Compliance Requirements: The DIRs introduce mandatory annual reconciliations for unallocated input VAT, redefine criteria for mixed sales tax rates, and expand the scope of non-creditable input VAT. Businesses must prepare for these changes to ensure compliance and mitigate risks associated with new tax obligations.
Source PwC
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