China Releases Comprehensive 2026 VAT and Consumption Tax Rules for Export Activities

This announcement represents the country’s first comprehensive alignment of export‑related VAT policies with the newly enacted VAT Law and its implementation regulations. It modernizes the export tax framework, strengthens compliance expectations, and clarifies administrative processes for both production and trading enterprises.

1. Scope and Structure of Export Tax Treatment

According to Announcement No. 11, export transactions fall into three categories of tax treatment:

1. VAT Refund or Exemption
2. VAT Exemption Only
3. VAT Taxable (Non‑Exempt)
   [newsglobenow.com]

These classifications apply to export activities involving:

• Goods
• Cross‑border services, including R&D, design, software development, and certain transportation services
• Intangible assets, under specified circumstances
  [newsglobenow.com]

2. Eligibility Requirements and Documentation Standards

2.1 VAT Refund/Exemption Eligibility

To qualify for a refund or exemption, exporters must meet specific criteria, including:

• Proof of exportation (verified customs clearance)
• Proper collection and verification of foreign exchange income
• Compliance with supporting documentation requirements
  [newsglobenow.com]

The announcement highlights increased scrutiny on documentation to mitigate risks of fraud and improper claims.

3. Methodologies for VAT Refund and Exemption

China applies different calculation models depending on the nature of the export entity:

3.1 Production Enterprises

Use the “Exemption–Credit–Refund” method, allowing:

• Exemption of export sales
• Credit of input VAT against domestic sales
• Refund of excess input VAT
  [newsglobenow.com]

3.2 Trading Enterprises

Use the “Exemption–Refund” method, allowing:

• Exemption of export sales
• Refund of verified input VAT associated with export goods
  [newsglobenow.com]

4. Declaration Deadlines and Compliance Requirements

A notable compliance feature of Announcement No. 11 is the 36‑month declaration window:

• Export VAT refund/exemption claims must be filed within 36 months from the export date.
• Failure to file within this period results in the export being treated as a domestic sale, subject to full VAT.
  [newsglobenow.com]

This introduces a clear statutory timeline and encourages timely compliance.

5. Taxable Scenarios and Exclusions

Certain exports do not qualify for zero‑rating or exemption and will instead be taxed. These include:

• Transactions lacking proper export credentials
• Incomplete or inaccurate supporting documents
• Fraudulent or improper use of export enterprise qualifications
  [newsglobenow.com]

These exclusions demonstrate China’s stricter enforcement posture under the new VAT regime.

6. Special Rules for “Deemed Exports”

The announcement provides granular clarification of deemed export scenarios, such as:

• Sales to duty‑free shops
• Deliveries into bonded zones or specialized customs‑supervised areas
• High‑technology sectors including aerospace and certain international supply chains
  [newsglobenow.com]

The expanded clarity helps enterprises operating in free‑trade and bonded zone environments to determine their export tax positions more accurately.

7. Alignment With the New VAT Law and Implementation Regulations

Announcement No. 11 complements the broader VAT reform framework, including:

• VAT Law effective 1 January 2026
• Implementation regulations issued 30 December 2025 (State Council Decree No. 826)
  which refined rules for exports, zero‑rating, and the scope of taxable transactions. [assets.kpmg.com]

Together, these reforms create a more unified statutory VAT system in China and reduce reliance on administrative circulars.

8. Practical Implications for Exporters

8.1 Increased documentation discipline

Exporters must ensure airtight compliance on customs, foreign exchange, and supporting invoices.

8.2 Earlier tax planning and process alignment

Businesses should refine export workflows to avoid missing the critical 36‑month refund application window.

8.3 Impact on service and intangible asset providers

Cross‑border R&D, design, software, and similar services now have clearer paths to exemption or zero‑rating, improving their tax efficiency.

8.4 Heightened enforcement focus

The announcement signals tightened supervision to prevent fraudulent export refund schemes.

Conclusion

China’s MOF/STA Announcement [2026] No. 11 marks a crucial step in harmonizing export VAT and consumption tax policies with the country’s newly codified VAT Law. By clearly defining refund/exemption eligibility, standardizing methodologies, enforcing stricter documentation, and introducing firm deadlines, the policy enhances certainty for exporters while strengthening tax administration.

For enterprises engaged in international trade, cross‑border services, or intangible asset transactions, understanding and embedding these rules into internal processes is essential for ensuring compliance and maximizing available VAT benefits going into 2026 and beyond.