China’s Finance Ministry Seeks Public Input on New VAT Law Draft Regulations Effective 2026

China is consulting on draft VAT law regulations effective from January 2026.
The draft law aligns with existing VAT policies but introduces key adjustments.
The regulations are divided into six chapters: provisions, rates, payable taxes, incentives, administration, and supplementary rules.
The scope of taxable transactions includes goods, services, intangibles, and immovable property.
Zero-rating eligibility is formalized for certain exported services.
Composite transactions follow a principal vs. ancillary rule for VAT rates.
A two-tier system governs input VAT deductions on long-term fixed assets.
Certain expenses are excluded from input VAT deductions.
Standardized documentation is required for input VAT deductions.
Anti-avoidance measures allow tax authorities to adjust arrangements lacking commercial substance.

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.