- China’s new VAT Law (effective January 1, 2026) updates VAT thresholds for natural persons and small-scale taxpayers, maintaining monthly/quarterly thresholds at RMB 100,000/RMB 300,000 respectively, but doubling the per-transaction/per-day threshold from RMB 500 to RMB 1,000.
- Certain activities for natural persons, such as rental income or income from internet platforms, mandate monthly aggregation against the RMB 100,000 threshold to prevent income splitting and ensure administrative efficiency, while other occasional transactions still use the per-transaction threshold.
- Foreign-Invested Enterprises (FIEs) are significantly impacted, needing to understand these thresholds, aggregation rules, and the ability for small-scale taxpayers to waive exemptions for issuing special VAT invoices, which affects cost management, VAT credit recovery, and potential withholding obligations.
Source China Briefing
China Clarifies VAT Thresholds and Tax Administration Measures in New Announcement
- From January 1, 2026, the new VAT Law and its regulations take effect, with clarified VAT threshold standards and management measures.
- The per-transaction VAT threshold for individuals is raised from 500 yuan to 1000 yuan, but certain transactions (e.g., property rental, scrap sales) use a monthly threshold of 100,000 yuan.
- Individuals reaching the VAT threshold can fulfill tax declaration via invoice application or withholding, reducing the need for self-declaration.
- Small-scale taxpayers can flexibly choose to waive VAT exemptions for specific transactions to issue special VAT invoices, without affecting other transactions’ eligibility for exemptions.
- The new measures aim to balance tax efficiency and fairness, reduce taxpayer burden, and ensure compliance.
Source: news.gmw.cn
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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