On December 25, 2024, China’s Standing Committee of the National People’s Congress passed a comprehensive Value Added Tax (VAT) law, which will take effect on January 1, 2026. This legislation aims to modernize and unify the VAT system, aligning it with international standards while maintaining the existing rate structure. The new law clarifies taxable transactions, updates exemptions, and establishes guidelines for nonresident enterprises, providing a more cohesive framework for VAT collection and taxpayer rights protection.
China Enacts Comprehensive VAT Law Set to Take Effect in 2026
Public
Other countries
Author: Ivana Picajkić
Category:
Fiscal subject related
Views:
250
Content accuracy validation date:
16.01.2025
Content accuracy validation time:
10:05h
On December 25, 2024, China’s Standing Committee of the National People’s Congress enacted a comprehensive Value Added Tax (VAT) law, set to take effect on January 1, 2026. This law represents the first extensive VAT legislation in China, building upon regulations introduced in the early 1990s and aimed at consolidating various rules to create a more cohesive system.
The new VAT law seeks to modernize the tax framework, align it with international standards, and unify all VAT regulations into a single legislative document, with the primary goal of standardizing VAT collection and safeguarding taxpayer rights. While it revises existing rules, it maintains the current rate structure and overall framework.
The law clarifies what constitutes taxable transactions and provides specific guidelines for nonresident enterprises operating in China. It also updates exemptions by adding and removing certain items.
Comprising six chapters and 38 articles, the main changes include:
- Definition of Taxable Transactions:
- Sales of goods originating in China,
- Sales or leases of real estate or rights to natural resources located in China,
- Sales of financial commodities issued in China or sold by entities or individuals within China,
- Sales of services or intangible assets consumed within China or provided by entities or individuals based in China.
- Taxable Transactions:
- Use of self-produced or commissioned goods for personal consumption or collective welfare,
- Transfers of goods without consideration by businesses or individual industrial households,
- Transfers of intangible assets, real estate, or financial commodities without consideration.
- Multiple Tax Rates:
- For transactions involving multiple tax rates, the applicable rates will depend on the primary business activity. Taxpayers must separately account for sales subject to different rates; if not done, the higher rate will apply.
- Non-Deductible Input VAT:
- Includes input tax related to simplified tax calculation items, VAT-exempt items, abnormal losses, goods and services used for personal consumption, catering services, and other specified input taxes.
The new law also includes a list of VAT-exempt supplies with standards determined by the State Council. If sales amounts are deemed unjustifiably low or high, tax authorities may assess them according to relevant regulations. Additionally, mechanisms will be established for sharing VAT-related information among various governmental authorities.
Other news from Other countries
South Africa Updates VAT Rules for Foreign Digital Suppliers (April 2025)
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
South Africa’s new VAT rules (Regulations No. 5993, effective 1 April 2025) update the treatment of electronically supplied services by foreign digital providers. B2B-only suppliers no longer need to register for VAT, while B2C and mixed suppliers must register if their turnover exceeds the threshold. Intra-group digital services are VAT-exempt under specific conditions. The changes aim to moderni... Read more
Understanding U.S. Sales Tax for Online Retailers
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
In 2024, U.S. ecommerce reached $1.192 trillion, with most online purchases involving taxable goods. Sales tax rates vary across more than 13,000 jurisdictions, and the applicable rate depends on state-specific sourcing rules, typically based on the shipping address, but sometimes the seller’s or billing address. Retailers must stay compliant with each state’s rules, including how shipping fees ar... Read more
Vietnam's New E-Invoicing Rules: What You Need to Know (Starting June 1, 2025)
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Vietnam's Decree 70/2025/ND-CP amends Decree 123/2020/ND-CP, enhancing e-invoicing for digital and cross-border businesses. It expands e-invoicing scope, sets issuance timelines, mandates invoice content and format, and requires businesses with over VND 1 billion(38483.80USD) revenue to use cash register e-invoices linked to tax authorities. Vietnam is updating its e-invoicing system through Decre... Read more
Latvia Embraces Digital Invoicing
Public
Other countries
Author: Ema Stamenković
Other countries
Author: Ema Stamenković
Latvia is implementing mandatory e-invoicing starting in 2025 to simplify transactions, boost tax compliance, and reduce the shadow economy. The centralized model will be implemented for B2G transactions and B2B transactions in 2026. The initiative aims to reduce tax evasion, increase efficiency, and standardize EU-compliant formats. Challenges include technical upgrades, staff training, and initi... Read more
US and EU Join Forces to Improve e-Invoicing Compatibility
Public
Other countries
Author: Ivana Picajkić
Other countries
Author: Ivana Picajkić
At the sixth Trade and Technology Council meeting, the US and EU agreed to strengthen electronic invoicing (e-invoicing) compatibility to lower trade costs, improve security, and simplify cross-border business operations. A new oversight body, the DBNAlliance, was launched to manage a shared exchange framework, allowing businesses to send and receive e-invoices through certified service providers.... Read more
Malaysia's E-Invoicing: MyInvois System Goes Live, Phased Implementation
Public
Other countries
Author: Ljubica Blagojević
Other countries
Author: Ljubica Blagojević
Malaysia is gradually implementing mandatory e-invoicing from August 2024 to January 2026 for businesses with sales over RM150,000. Invoices must be approved by the tax authority before being sent to customers, using the MyInvois system and Peppol network. The rollout supports Malaysia’s push to modernize tax reporting and improve compliance. Malaysia is rolling out its MyInvois e-invoicing system... Read more
TLv6 Implementation Marks Significant Shift in EU’s Trust List Format
Public
All countries
Author: Ivana Picajkić
A new EU Trust List format, TLv6, will officially replace TLv5 in May 2025 as part of the updated eIDAS Regulation (EU 2024/1183). It introduces key technical changes like a new URI field, updated signature format, and optional phone number support. Organizations must update their systems to avoid signature validation failures and service disruptions, as TLv5 will no longer be valid once TLv6 take... Read more