China Expands VAT to Include Interest Income from Government and Financial Bonds

• China is expanding VAT to include interest income from government and financial bonds.
• This marks a significant change in the taxation of financial services in China.
• Businesses above GST registration thresholds may now register.
• The VAT re-imposition aims to shift funds from the rates market to equity and credit markets.
• From 8 August 2025, VAT will apply to interest on newly issued treasury, local government, and financial institution bonds.
• This change ends decades of preferential treatment where bond interest was exempt from VAT and previously from the business tax regime.

Source: vatcalc.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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