China’s 2026 VAT Law Reform: Key Changes and Implementation Details

• China’s VAT Law Reform is set to be effective from January 2026
• The VAT Law was prepared starting in 2019 and marks a significant overhaul in the Chinese tax system
• VAT has been a part of China’s tax system since 1994, initially applied only to goods
• The dual VAT and Business Tax system was replaced in 2008 due to inefficiencies
• A Business Tax to VAT pilot reform led to the first draft of the VAT Law in 2019
• The third draft of the VAT Law was adopted to replace the Provisional VAT Regulations
• The VAT Law includes six chapters covering tax rates, taxable amounts, and exemptions
• Tax rates under the new law are 13% for goods and certain services, 9% for transportation and real estate services, and 6% for other services and intangible assets
• Exports will have a zero VAT rate
• All individuals and businesses involved in taxable activities must register and comply with VAT requirements
• Further clarifications and regulations, especially for non-resident taxable persons, are expected before the law is implemented
• The adoption of the VAT Law is a major milestone reflecting over 30 years of VAT system evolution in China
• Detailed Implementation Regulations are anticipated to be published in the second half of 2025

Source: vatabout.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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