China Implements First Comprehensive VAT Law: Key Changes for Domestic and International Businesses

• China’s first comprehensive VAT law took effect on January 1, 2026, consolidating and modernizing VAT rules to align with international standards.
• The law clarifies what transactions are taxable, especially for services and intangibles, and simplifies “deemed sales” rules, making compliance easier.
• The three-tier VAT rate structure (13%, 9%, 6%) is retained, but the simplified VAT rate is unified at 3% for small or simple sellers.
• Cross-border services and intangibles are now taxed where consumed in China, impacting foreign businesses and requiring new compliance measures.
• The law introduces stricter compliance requirements, including clearer rules for mixed transactions, small-scale taxpayer status, and input VAT deductions.

Source: innovatetax.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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