China released its first official VAT Law on December 25, 2024, set to take effect on January 1, 2026. Intending to strengthen the existing system, which made up 38% of tax revenue in 2024, the law introduces important changes—such as shifting the sourcing rule for services to the place of consumption, clarifying VAT rules for financial products, and refining "deemed sales." (Deemed sales refer to transactions that are treated as sales for tax purposes, even though no actual sale has occurred.) Article 15 imposes tax withholding obligations on buyers in foreign e-commerce unless a domestic agent is involved, signaling possible future VAT registration for non-resident sellers. Further rules are expected, and businesses should monitor updates to stay compliant.
China Enacts First Formal VAT Law, Effective 2026
Public
Other countries
Author: Ljubica Blagojević
Category:
General subject related
Views:
1937
Content accuracy validation date:
13.05.2025
Content accuracy validation time:
08:55h
On 25 December 2024, China’s Standing Committee of the National People’s Congress published the Value Added Tax (VAT) Law, effective from 1 January 2026. VAT, contributing around 38% of China’s total tax revenue in 2024, was previously governed by a fragmented set of regulations from the Ministry of Finance (MOF) and State Taxation Administration (STA).
The new VAT Law strengthens the principle of "taxation according to the law," but how it will integrate with existing rules remains unclear. A significant change is to base the taxation of services and intangible properties on the "place of consumption," bringing China's VAT system more in line with global standards. Regarding financial products, the Law now explicitly states that VAT is applicable when a product is issued within China or sold by a Chinese entity or individual.
The Law also narrows the range of “deemed sales,” removing the previous broad catch-all rule and limiting it to specified scenarios. However, since the VAT Law does not automatically repeal earlier rules, further MOF and STA regulations will be needed to fill gaps and address complex issues.
Article 15 introduces significant changes for foreign e-commerce: it puts the buyer in charge of handling VAT withholding unless the overseas seller decides to use a local representative. This means foreign sellers can avoid the hassle of setting up shop locally. However, it also hints that China might eventually make foreign suppliers sign up for VAT, just like many other countries do.
Both multinational and domestic businesses should closely monitor upcoming regulations, as they could significantly affect current VAT compliance frameworks.
Other news from Other countries
Malaysia Postpones Mandatory E-Invoicing to 2027
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Malaysia has delayed mandatory MyInvois e-invoicing for businesses with RM1m–RM5m (€190k – €980k) turnover to 1 January 2027, with an extended penalty-free transition, citing readiness and cost concerns. This follows the increase of the exemption threshold to RM1 million, which removes smaller businesses from the scope and cancels the RM500k–RM1m rollout. Larger taxpayers remain on the existing ti... Read more
Hong Kong Mandates Electronic Filing for Pillar Two Top-Up Tax Starting January 2026
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Inland Revenue Department confirmed that Pillar Two top-up tax filings in Hong Kong will be mandatory via an electronic portal from January 2026. In-scope Part 4AA entities must submit notifications and returns through the new Pillar Two Portal, accessed via the Business Tax Portal (BTP), using an organisational e-cert with AEOI functions. While Pillar Two applies to fiscal years starting 1 Januar... Read more
Challenges in Managing Electronic Invoices in Vietnam
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Strengthening management through stricter enforcement, advanced technology, and increased awareness of tax laws is essential to prevent fraud effectively and protect revenue. Current laws impose administrative or criminal penalties for illegal invoice trading/use, based on severity. Decree No. 310/2025/ND-CP (amending Decree 125/2020/ND-CP), effective January 16, 2026, expands violation scope, cl... Read more
New Simplified VAT Framework Introduced for Small Businesses in Chile
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
From January 1, 2026, Chile simplifies VAT for small businesses, allowing fixed monthly payments if qualifying criteria and application procedures are met. With effect from January 1, 2026, the Chilean tax authority has simplified the VAT taxation regime for small taxpayers. This simplifies their tax obligations by enabling qualified small businesses to pay a fixed monthly VAT based on their sales... Read more
Accredited Service Provider (ASP): The Trust Anchor in UAE's E-Invoicing
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
An Accredited Service Provider (ASP) is crucial for businesses in the UAE’s digital tax system, holding exclusive authority to obtain clearance from the Federal Tax Authority (FTA). Unlike standard ERP software, ASPs provide secure transmission and validation, serving as intermediaries in the Peppol-based 5-Corner Model for e-invoicing. Their core responsibilities include transforming raw data int... Read more
Understanding VAT Rates in Vietnam
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
VAT in Vietnam is applied to goods and services, with rates of 0%, 5%, and 10% depending on the product category. A temporary reduction to 8% is enacted until December 31, 2026, except in certain sectors. Exemptions include agricultural products, items with low annual revenue, and specific services. Businesses must properly manage VAT rates to avoid penalties, file declarations monthly or quarterl... Read more
Malaysia Tightens E-Invoicing Validation Rules for Data Quality
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Malaysia’s Inland Revenue Board (IRBM) is strengthening e-invoicing validation rules by introducing stricter format, length, and code requirements for main invoice fields to improve data quality. Businesses must update their invoicing and ERP systems to avoid rejections, with the changes effective in Sandbox from 15 December 2025 and in Production from 9 January 2026. The updated rules impose form... Read more