- China’s STA issued new VAT implementation rules clarifying input tax deductions for non-taxable transactions under Public Notice [2026] No. 2.
- Input VAT linked to non-deductible non-taxable transactions cannot be credited against output tax, even if the activities generate economic benefits.
- Mixed-use long-term assets valued at RMB 5 million or less can have input VAT fully deducted upfront; assets above RMB 5 million require annual adjustments during the adjustment period.
- If non-deductible input VAT cannot be separately identified, it must be allocated using revenue proportions and later reconciled in the January filing period.
Source: regfollower.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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