China’s new VAT law, effective 1 January 2026, modernizes the tax system in line with OECD standards and replaces outdated rules. The three-tier rate structure (13%, 9%, 6%) remains, but the scope expands to cover more transactions, including those by individuals. Main changes include the place-of-consumption rule for cross-border services, clearer rules for foreign digital providers, and taxation of financial services and non-cash benefits based on market value. Administrative reforms simplify filing and increase legal certainty. Businesses, especially in digital and cross-border sectors, should prepare now for the new compliance requirements.
China's New VAT Law: Modernizing Tax System for 2026
Public
Other countries
Author: Ljubica Blagojević
Category:
General information
Views:
3401
Content accuracy validation date:
11.08.2025
Content accuracy validation time:
09:31h
Important Highlights and Analysis:
- Tax Structure Maintained, Legal Certainty Enhanced
- The three-tier VAT rate remains:
- 13% for general goods/imports
- 9% for essential services (utilities, publishing, transport)
- 6% for modern services (IT, finance, consulting)
- Unlike past provisional rules (in place since 1994), the new law provides a formal legal basis, improving consistency and reducing administrative ambiguity.
- Broader Scope of Taxable Transactions
- Article 3 defines VAT liability across goods, services, intangibles, real estate, and imports—including transactions by individuals and sole proprietors.
- The law embraces the place-of-consumption principle for cross-border services, aligning with OECD norms and shifting the tax point from the provider's location to where the service is used.
- Cross-Border and Digital Services
- Clear rules apply to foreign providers: VAT is due when the consumer is in China, the product is issued there, or the seller is Chinese.
- Withholding agents may be appointed in China for foreign digital service providers—avoiding full registration burdens while ensuring tax compliance.
- Financial Services and Revenue Definitions
- Financial products are now explicitly taxable. Even free offerings are treated as deemed sales.
- Non-cash benefits are taxable, and market value will guide taxation. Authorities can adjust prices if declared values are unreasonably low or high.
- Administrative Reforms
- Short filing periods are removed, and VAT on imports will now follow customs timelines, simplifying procedures.
- The repeal of the “fallback clause” reduces discretionary tax treatment by authorities, bringing greater predictability.
Business Implications:
- Companies should review contracts, pricing, and invoicing practices ahead of the 2026 implementation.
- Those in cross-border trade, finance, and digital services face the most significant adjustments.
- Some operational details—like input VAT refunds and deductions—will be finalized in upcoming regulations.
China’s new VAT law marks a modernization milestone, maintaining core rates while introducing clarity, legal structure, and global alignment. It reinforces China’s commitment to a predictable, business-friendly tax environment, especially for firms operating across borders. Businesses should begin early compliance preparations to adapt to the new framework.
Other news from Other countries
New document was uploaded: Q&A from the webinar: Brazil enters new Era
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
On November 27th, 2025, Fiscal Solutions organized a free webinar on the topic of "Brazil enters a new Era". The webinar was held by Fiscal Solutions Legal Consultant Ivana Picajkić. Let’s find out more about answers to questions asked during the webinar We answered the questions such as,: Are there any exceptions from the fiscalization obligation? Are the requirements that a company has to... Read more
New webinar was uploaded: Recorded webinar: Brazil Enters New Era – SW Fiscalization Takes Over Brazil
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
On November 27 , 2025, Fiscal Solutions organized a free webinar on the topic „Brazil enters new era – SW fiscalization takes over Brazil“ The webinar was held by Ivana Picajkić, Legal Consultant at Fiscal Solutions The following topics were discussed during this webinar:- From old to new: Brazil’s fiscalization journey- Hardware fiscalization: Where it still applies- NFC-e: The new era of... Read more
Thailand's e-Tax Invoice System: A Digital Transition for Business Documents
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
An e–Tax Invoice is a digital tax invoice that replaces paper documents, regulated by Ministerial Regulation No. 384, the Electronic Transactions Act, and ICT Standard Recommendation No. 3-2560. Thailand offers two types: e–Tax Invoice & e–Receipt for all businesses, requiring a Digital Signature and Electronic Certificate, and e–Tax Invoice by Email for small businesses (≤ THB 30 million), verifi... Read more
Philippines Senate Proposes Abolishing VAT and 3% Percentage Tax
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
The Philippine Senate is reviewing Bill No. 1450, which proposes to abolish the current VAT system and remove major VAT rules from the tax code, including those on taxable persons, invoicing, digital transactions and input credits. The bill also aims to scrap the 3% percentage tax for small VAT-exempt businesses under PHP 3 million in annual sales. If enacted, the reform would take effect 15 days... Read more
UAE E-Invoicing: Important Facts & Preparation Guide
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
In the UAE, businesses must adopt e-invoicing by July 2026, requiring updates to systems for compliance with Federal Tax Authority rules. E-invoices need structured data, and all VAT invoices must meet specific format requirements to avoid penalties and ensure accurate reporting. In the UAE, VAT is going fully digital with mandatory e-invoicing, a major shift requiring businesses to upgrade billin... Read more
Overview of Colombia's E-Invoicing & E-Reporting Regulations
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
All VAT-registered entities in Colombia must issue electronic invoices for B2B, B2C, and B2G transactions, with foreign firms required to comply if VAT-registered. Exports have special e-invoices, while imports from non-invoicing suppliers are documented via “support documents.” Nearly all taxable transactions are electronically recorded. Key milestones span from 1995’s legal recognition to 2025’s... Read more
Australia E-Invoicing via Peppol
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Australia employs the Peppol network with a phased, voluntary approach to e-invoicing. B2G transactions with federal agencies are mandatory since 1 July 2022. While B2B adoption is encouraged, it remains non-compulsory. Federal agencies must process ≥30% of invoices via e-invoicing by 1 July 2026. The Australian Taxation Office oversees the network but does not handle individual invoices. E-invoic... Read more