Value-Added Tax Law of the People’s Republic of China

Order of the President of the People’s Republic of China  (No. 41)

The Value-Added Tax Law of the People’s Republic of China was adopted at the 13th Meeting of the Standing Committee of the 14th National People’s Congress on December 25, 2024, and is hereby promulgated, effective as of January 1, 2026.

Xi Jinping

President of the People’s Republic of China

December 25, 2024

 

Value-Added Tax Law of the People’s Republic of China

 

Table of Contents

Chapter I General Provisions

Chapter II Tax Rates

Chapter III Taxable Amount

Chapter IV Tax Incentives

Chapter V Collection and Administration

Chapter VI Supplementary Provisions

Article 1 This Law is enacted to improve the value-added tax system conducive to high-quality development, regulate the collection and payment of value-added tax, and protect the lawful rights and interests of taxpayers.

Article 2 The work on value-added tax shall implement the guidelines, policies, decisions, and arrangements of the Party and the State and serve the national economic and social development.

Article 3 Entities and individuals (including individual businesses) that sell goods, services, intangible assets, or immovable property (hereinafter referred to as taxable transactions) within the territory of the People’s Republic of China (hereinafter referred to as the territory), or import goods, are taxpayers of value-added tax and shall pay value-added tax in accordance with the provisions of this Law.

The sale of goods, services, intangible assets, or immovable property refers to the transfer of ownership of goods or immovable property for consideration, the provision of services for consideration, or the transfer of ownership or use rights of intangible assets for consideration.

Article 4 The occurrence of a taxable transaction within the territory refers to any of the following circumstances:

(1) For the sale of goods, the place of dispatch or location of the goods is within the territory;

(2) For the sale or lease of immovable property, or the transfer of the right to use natural resources, the location of the immovable property or natural resources is within the territory;

(3) For the sale of financial commodities, the financial commodities are issued within the territory, or the seller is an entity or individual within the territory;

(4) Except as provided in items (2) and (3) of this Article, for the sale of services or intangible assets, the services or intangible assets are consumed within the territory, or the seller is an entity or individual within the territory.

Article 5 Any of the following circumstances shall be deemed as taxable transactions and shall be subject to value-added tax in accordance with the provisions of this Law:

(1) Entities and individual businesses use self-produced or commissioned-processed goods for collective welfare or personal consumption;

(2) Entities and individual businesses transfer goods without consideration;

(3) Entities and individuals transfer intangible assets, immovable property, or financial commodities without consideration.

Article 6 Any of the following circumstances shall not be considered taxable transactions and no value-added tax shall be levied:

(1) Services provided by employees to their employing entities or employers in exchange for wages or salaries;

(2) Collection of administrative fees or government funds;

(3) Compensation obtained due to expropriation or requisition in accordance with legal provisions;

(4) Interest income from deposits.

Article 7 Value-added tax is an off-price tax, and the sales amount of a taxable transaction does not include the value-added tax amount. The value-added tax amount shall be separately stated in the transaction voucher in accordance with the provisions of the State Council.

Article 8 When a taxpayer engages in a taxable transaction, unless otherwise provided in this Law, the taxpayer shall calculate and pay value-added tax using the general tax computation method, which calculates the tax payable by offsetting the input tax amount against the output tax amount.

Small-scale taxpayers may calculate and pay value-added tax using the simplified tax computation method, which calculates the tax payable based on the sales amount and the levy rate.

The tax computation methods for value-added tax on the joint exploitation of offshore oil and natural gas by Chinese and foreign parties shall be carried out in accordance with the relevant provisions of the State Council.

Article 9 For the purposes of this Law, “small-scale taxpayer” refers to a taxpayer with an annual value-added tax taxable sales amount not exceeding CNY 5 million.

Where a small-scale taxpayer has a sound accounting system and can provide accurate tax information, it may register with the competent tax authority and calculate and pay value-added tax in accordance with the general tax computation method provided in this Law.

Based on the needs of national economic and social development, the State Council may adjust the criteria for small-scale taxpayers and report to the Standing Committee of the National People’s Congress for recordation.

Article 10 Value-added tax rates:

(1) Unless otherwise provided in items (2), (4), and (5) of this Article, the tax rate for taxpayers selling goods, providing processing, repair, and replacement services, leasing tangible movable property, or importing goods is 13%.

(2) Unless otherwise provided in items (4) and (5) of this Article, the tax rate for taxpayers selling transportation, postal, basic telecommunications, construction, or immovable property leasing services, selling immovable property, transferring land use rights, or selling or importing the following goods is 9%:

  1. Agricultural products, edible vegetable oils, and edible salt;

  2. Tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas, natural gas, dimethyl ether, biogas, and coal products for residential use;

  3. Books, newspapers, magazines, audio-visual products, and electronic publications;

  4. Feed, fertilizers, pesticides, agricultural machinery, and agricultural films.

(3) Unless otherwise provided in items (1), (2), and (5) of this Article, the tax rate for taxpayers selling services or intangible assets is 6%.

(4) The tax rate for taxpayers exporting goods is zero, unless otherwise provided by the State Council.

(5) The tax rate for cross-border sales of services or intangible assets within the scope prescribed by the State Council by entities or individuals within the territory is zero.

Article 11 The levy rate for calculating and paying value-added tax using the simplified tax computation method is 3%.

Article 12 Where a taxpayer engages in two or more taxable transactions involving different tax rates or levy rates, the taxpayer shall separately account for the sales amounts applicable to different tax rates or levy rates; if such separate accounting is not done, the higher tax rate or levy rate shall apply.

Article 13 Where a taxpayer engages in one taxable transaction involving two or more tax rates or levy rates, the tax rate or levy rate applicable to the main business of the taxable transaction shall apply.

Article 14 Where value-added tax is calculated and paid using the general tax computation method, the tax payable is the balance after offsetting the input tax amount for the current period against the output tax amount for the current period.

Where value-added tax is calculated and paid using the simplified tax computation method, the tax payable is the sales amount for the current period multiplied by the levy rate.

For imported goods, value-added tax shall be calculated and paid by multiplying the composite taxable price prescribed in this Law by the applicable tax rate. The composite taxable price is the customs duty taxable price plus customs duty and consumption tax; where the State Council provides otherwise, such provisions shall prevail.

Article 15 Where an overseas entity or individual engages in a taxable transaction within the territory, the purchaser shall be the withholding agent, unless the overseas entity or individual entrusts an agent within the territory to declare and pay the tax in accordance with the provisions of the State Council.

Where a withholding agent withholds and remits tax in accordance with the provisions of this Law, the tax to be withheld shall be calculated by multiplying the sales amount by the tax rate.

Article 16 “Output tax amount” refers to the value-added tax amount calculated by multiplying the sales amount by the tax rate prescribed in this Law when a taxpayer engages in a taxable transaction.

“Input tax amount” refers to the value-added tax amount paid or borne by a taxpayer when purchasing goods, services, intangible assets, or immovable property.

A taxpayer shall use value-added tax deduction vouchers prescribed by laws, administrative regulations, or the State Council to offset the input tax amount against the output tax amount.

Article 17 “Sales amount” refers to the total consideration obtained by a taxpayer in connection with a taxable transaction, including all monetary and non-monetary economic benefits, excluding the output tax amount calculated using the general tax computation method and the tax payable calculated using the simplified tax computation method.

Article 18 The sales amount shall be calculated in Renminbi. Where a taxpayer settles the sales amount in a currency other than Renminbi, it shall be converted into Renminbi for calculation.

Article 19 Where a transaction is deemed a taxable transaction under Article 5 of this Law or the sales amount is in non-monetary form, the taxpayer shall determine the sales amount based on the market price.

Article 20 Where the sales amount is obviously too low or too high without justifiable reasons, the tax authority may assess the sales amount in accordance with the provisions of the Law of the People’s Republic of China on the Administration of Tax Collection and relevant administrative regulations.

Article 21 Where the input tax amount for the current period exceeds the output tax amount for the current period, the taxpayer may, in accordance with the provisions of the State Council, choose to carry forward the excess to the next period for further offsetting or apply for a refund.

Article 22 The following input tax amounts of a taxpayer shall not be offset against the output tax amount:

(1) Input tax amounts corresponding to items taxed using the simplified tax computation method;

(2) Input tax amounts corresponding to items exempt from value-added tax;

(3) Input tax amounts corresponding to abnormal loss items;

(4) Input tax amounts corresponding to goods, services, intangible assets, or immovable property purchased and used for collective welfare or personal consumption;

(5) Input tax amounts corresponding to catering services, daily residential services, and entertainment services purchased and directly used for consumption;

(6) Other input tax amounts prescribed by the State Council.

Article 23 Where a small-scale taxpayer engages in a taxable transaction and the sales amount does not reach the threshold, value-added tax shall be exempted; if the sales amount reaches the threshold, value-added tax shall be calculated and paid in full in accordance with the provisions of this Law.

The threshold standard referred to in the preceding paragraph shall be prescribed by the State Council and reported to the Standing Committee of the National People’s Congress for recordation.

Article 24 The following items are exempt from value-added tax:

(1) Self-produced agricultural products sold by agricultural producers, agricultural mechanization operations, irrigation and drainage, pest and disease control, plant protection, agricultural and livestock insurance, and related technical training services, as well as breeding and disease prevention and control services for poultry, livestock, and aquatic animals;

(2) Medical services provided by medical institutions;

(3) Ancient and used books, and items sold by individuals that have been used by themselves;

(4) Imported instruments and equipment directly used for scientific research, scientific experiments, and teaching;

(5) Imported materials and equipment provided as gratuitous aid by foreign governments or international organizations;

(6) Items imported directly by organizations for the disabled for the exclusive use of disabled persons, and services provided by disabled individuals;

(7) Childcare services provided by nurseries, kindergartens, elderly care institutions, and institutions for the disabled, marriage introduction services, and funeral services;

(8) Academic education services provided by schools, and services provided by students under work-study programs;

(9) Ticket income from cultural activities held by memorial halls, museums, cultural centers, management institutions of cultural relic protection units, art galleries, exhibition halls, calligraphy and painting academies, and libraries, as well as ticket income from cultural and religious activities held by religious venues.

The specific standards for the tax exemption items specified in the preceding paragraph shall be prescribed by the State Council.

Article 25 Based on the needs of national economic and social development, the State Council may formulate special value-added tax preferential policies for supporting the development of small and micro enterprises, fostering key industries, encouraging innovation and entrepreneurship and employment, charitable donations, and other circumstances, and shall report such policies to the Standing Committee of the National People’s Congress for recordation.

The State Council shall, at appropriate times, conduct evaluations and adjustments of value-added tax preferential policies.

Article 26 Where a taxpayer concurrently operates value-added tax preferential items, the taxpayer shall separately account for the sales amounts of the value-added tax preferential items; items not separately accounted for shall not be eligible for tax incentives.

Article 27 A taxpayer may waive value-added tax incentives; where incentives are waived, the taxpayer shall not enjoy such tax incentives for 36 months, except for small-scale taxpayers.

Article 28 The time when the value-added tax obligation arises shall be determined as follows:

(1) For a taxable transaction, the time when the tax obligation arises is the date when the sales proceeds are received or the document for claiming the sales proceeds is obtained; if an invoice is issued first, it is the date when the invoice is issued.

(2) For a transaction deemed as a taxable transaction, the time when the tax obligation arises is the date when the deemed taxable transaction is completed.

(3) For imported goods, the time when the tax obligation arises is the date when the goods are declared for import.

The time when the value-added tax withholding obligation arises is the date when the taxpayer’s value-added tax obligation arises.

Article 29 The place for value-added tax declaration shall be determined as follows:

(1) A taxpayer with a fixed place of production or business operations shall declare tax to the competent tax authority at its place of establishment or residence. Where the head office and its branches are located in different counties (cities), each shall declare tax to the competent tax authority at its respective location; with approval from the finance or tax authorities at or above the provincial level, the head office may make a consolidated tax declaration to the competent tax authority at its place of establishment.

(2) A taxpayer without a fixed place of production or business operations shall declare tax to the competent tax authority at the place where the taxable transaction occurs; if the tax is not declared, the competent tax authority at the taxpayer’s place of establishment or residence shall collect the unpaid tax.

(3) An individual selling or leasing immovable property, transferring the right to use natural resources, or providing construction services shall declare tax to the competent tax authority at the location of the immovable property, natural resources, or the place where the construction services are provided.

(4) A taxpayer importing goods shall declare tax at the place prescribed by customs authorities.

(5) A withholding agent shall declare and pay the withheld tax to the competent tax authority at its place of establishment or residence; if its place of establishment or residence is outside the territory, the withholding agent shall declare and pay the withheld tax to the competent tax authority at the place where the taxable transaction occurs.

Article 30 The tax computation periods for value-added tax are 10 days, 15 days, one month, or one quarter. The specific tax computation period for a taxpayer shall be determined by the competent tax authority based on the amount of tax payable by the taxpayer. Taxpayers who do not frequently engage in taxable transactions may calculate tax on a per-transaction basis.

A taxpayer using one month or one quarter as a tax computation period shall declare and pay tax within 15 days from the end of the period. A taxpayer using 10 days or 15 days as a tax computation period shall declare and pay tax within 15 days from the first day of the following month.

The tax computation period and the deadline for declaring and paying tax for a withholding agent to remit tax shall be handled in accordance with the provisions of the preceding two paragraphs.

A taxpayer importing goods shall declare and pay tax within the time limit prescribed by the customs authorities.

Article 31 Where a taxpayer uses 10 days or 15 days as a tax computation period, the taxpayer shall prepay tax within five days from the end of the period.

Where laws or administrative regulations provide otherwise for the prepayment of tax by taxpayers, such provisions shall prevail.

Article 32 Value-added tax shall be collected by tax authorities, and value-added tax on imported goods shall be collected by customs authorities on behalf of the tax authorities.

Customs authorities shall provide tax authorities with information on the value-added tax collected on behalf and on the export declaration of goods.

The method for calculating value-added tax on articles carried or mailed into the territory by individuals shall be prescribed by the State Council and reported to the Standing Committee of the National People’s Congress for recordation.

Article 33 Where a taxpayer exports goods or cross-border sells services or intangible assets with a zero tax rate, the taxpayer shall apply to the competent tax authority for tax refund (exemption). The specific measures for export tax refund (exemption) shall be prescribed by the State Council.

Article 34 Taxpayers shall issue and use value-added tax invoices in accordance with the law. Value-added tax invoices include paper invoices and electronic invoices. Electronic invoices have the same legal validity as paper invoices.

The State actively promotes the use of electronic invoices.

Article 35 Tax authorities shall establish mechanisms for sharing value-added tax-related information and for cooperation with departments such as industry and information technology, public security, customs, market supervision and administration, the People’s Bank of China, and financial supervision and administration.

Relevant departments shall, in accordance with laws and administrative regulations, support and assist tax authorities in the collection and administration of value-added tax within their respective functions.

Article 36 The collection and administration of value-added tax shall be carried out in accordance with the provisions of this Law and the Law of the People’s Republic of China on the Administration of Tax Collection.

Article 37 Where any taxpayer, withholding agent, tax authority, or its staff member violates the provisions of this Law, legal liability shall be pursued in accordance with the Law of the People’s Republic of China on the Administration of Tax Collection and relevant laws and administrative regulations.

Article 38 This Law shall take effect as of January 1, 2026. The Interim Regulation of the People’s Republic of China on Value-Added Tax shall be simultaneously repealed.