On December 25, 2024, China's Standing Committee of the 14th National People’s Congress passed the Value-Added Tax (VAT) Law, set to take effect on January 1, 2026. This marks a significant milestone in China's fiscal policy evolution, reinforcing the principle of statutory taxation while addressing the complex needs of businesses and consumers alike.
China Passes New VAT Law: Is Fiscalization Next?
Public
Other countries
Author: Darko Pavic
Category:
Fiscal subject related
General information
Views:
548
Content accuracy validation date:
26.12.2024
Content accuracy validation time:
09:28h
The Importance of VAT in China
VAT stands as the largest tax category in China, contributing nearly 38% of the country’s total national tax revenue. In 2023 alone, VAT revenue reached an impressive RMB 6.9 trillion. With over 60 million VAT taxpayers and its application across goods, services, and real estate, VAT impacts virtually every segment of China's economy.
Evolution of China’s VAT Framework
China's VAT system was first introduced in 1994 through interim regulations. Over the years, it has undergone significant reforms, including the notable replacement of the business tax with VAT, broadening its application. The journey toward codifying the VAT system began with a draft VAT Law open for public consultation in 2022, culminating in its approval after three legislative readings in 2024.
Key Features of the New VAT Law
While the full text of the law is not yet released, its framework maintains existing VAT rates and structures, ensuring stability for taxpayers. Exemptions are expected to include agricultural products, scientific research equipment, and services provided by welfare institutions. These provisions aim to balance fiscal revenue needs with socio-economic priorities.
Implications for Businesses and the Economy
The VAT Law's implementation aligns with China’s broader economic strategies, including efforts to revitalize its slowing economy. Notably, VAT revenue in the first 11 months of 2024 dropped 4.7% year-over-year, reflecting weak domestic demand. However, a 1.36% rebound in November VAT revenue suggests a recovery in business activity and industrial profits.
For businesses, the new VAT Law presents both challenges and opportunities. Transitioning to the updated legal framework will require careful preparation, particularly for VAT compliance. Policymakers are expected to provide detailed guidelines and support measures to ensure a smooth shift for businesses of all sizes.
The Bigger Picture
With this new legislation, China now has dedicated laws for 14 of its 18 tax categories, covering the majority of national tax revenue. This progress demonstrates China's commitment to modernizing its fiscal governance and aligning with global best practices.
What’s Next?
As the details of the VAT Law unfold, businesses and fiscal solution providers must closely monitor developments to adapt efficiently. For international retailers and global companies operating in China, partnering with experts in fiscal compliance will be critical.
At Fiscal Solutions, we specialize in helping businesses navigate complex tax systems worldwide. Our middleware and expertise are designed to simplify fiscal compliance, offering seamless integration into your POS systems. As the 2026 deadline approaches, we’re ready to help you align with China’s new VAT Law while minimizing operational disruptions.
Is fiscalization the next step?
Feel free to share your thoughts or questions about China’s VAT reforms in the comments below! Let’s discuss how this new legislation might shape the future of business in one of the world’s largest economies.
Other news from Other countries
The Philippines Implement VAT on Foreign Digital Services
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
The Philippine BIR has issued Circular No. 47-2025, detailing VAT rules for foreign digital service providers starting 1 June 2025. Registration is required only if annual sales exceed PHP 3 million, and no local tax representative is needed. The simplified process supports fair competition and reduces compliance burdens, aligning with international digital tax practices. The Philippine Bureau of... Read more
Singapore Starts Phased Rollout of Mandatory E-Invoicing
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Singapore’s Peppol-based e-invoicing system, launched in May 2025, becomes mandatory for new GST registrants from November 2025 and fully enforced by April 2026. Businesses are urged to adopt early via InvoiceNow, IMDA’s national platform. E-invoicing providers help ensure IRAS compliance, secure document handling, and cross-border readiness. Important Components: InvoiceNow: The national e-inv... Read more
UAE to Ban Single-Use Plastics by 2026
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The UAE will ban single-use plastic products from January 1, 2026, as part of a phased strategy to combat plastic pollution. The ban builds on the 2024 ban, aiming for a future free of waste and pollution. The UAE is focusing on efficient resource use, sustainable food practices, and reducing plastic waste. Starting January 1, 2026, the UAE will prohibit the import, production, and trade of single... Read more
Chile Mandates Printed or Digital E-Tickets for All B2C Sales
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
The authority has issued exempt resolution No. 53, requiring taxpayers to deliver printed or virtual representations of e-tickets or vouchers for B2C transactions, including cash, bank transfers, debit, credit, and prepaid cards, effective May 1, 2025. The authority has released exempt resolution No. 53, which mandates the delivery of either a printed or digital copy of the e-ticket (which s... Read more
Estonia's VAT Hike: 24% Standard Rate Begins July 2025
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Estonia's standard VAT rate will rise from 22% to 24% from 1 July 2025, with reduced rates from 9% to 13% and 5% to 9%. Starting July 1st, 2025, Estonia is raising its standard VAT rate from 22% up to 24%. The lower VAT rates are going up too, moving from 9% to 13% and from 5% to 9%. So, what do you need to do? When selling to customers in Estonia and charging them VAT, it’s a must to use... Read more
Vietnam Issued New E-Invoicing Rules
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Vietnam's Ministry of Finance has updated regulations on e-invoices, taxpayer risk assessment, and invoicing procedures for business models, effective 1 June 2025. The circular introduces new invoice types, reconciliation periods, and criteria for identifying high tax risk taxpayers. Vietnam’s Ministry of Finance issued Circular 32/2025/TT-BTC on 31 May 2025, updating guidance on invoices un... Read more
Chile: SII Mandates Third-Party Seller Reporting for Digital Marketplaces
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Chilean Tax Authority (SII) introduced new reporting obligations for digital platforms and payment providers starting October 1, 2025, with additional requirements from January 1, 2026. These rules enhance tax oversight and VAT compliance in the digital economy. The Chilean Tax Authority (SII) issued Circular 38/2025, introducing new reporting obligations for digital platforms and electronic payme... Read more