China adopts value-added tax law, to take effect in 2026 Via Reuters

BEIJING (Reuters) – China approved a new value-added tax law on Wednesday to take effect on Jan. 1, 2026, a Xinhua official said, bringing into one document previous regulations that included exempting items from get out of tax.

VAT, the largest tax component in China, will account for 38% of the country’s revenue by 2023, official data show.

The report did not elaborate on the terms of the law. The latest plan included exemptions for certain agricultural products, imported equipment and supplies for scientific research and education, imported goods for the disabled and services provided by welfare centers such as kindergartens, nurseries and nursing homes for the elderly.

To help a particular sector or business, the government can introduce new items in the tax credit scheme.

“With the introduction of the VAT Law, 14 of the 18 tax departments in China have their own laws, covering most of the tax revenue and marking a major step forward in implementing the tax law. of the law,” Xinhua said.

The law was passed at the end of a meeting of China’s highest court, the Public Affairs Committee of the People’s Congress, which began on Saturday.

Last month, China unveiled tax incentives on real estate to support a battered property market. Residents are exempt from VAT when selling their home at least two years after purchase.

In September 2023, the finance ministry said it would extend a VAT refund scheme aimed at encouraging domestic and foreign research institutes to buy equipment made in China until the end of 2027.

China in 2019 reduced the VAT rate for manufacturers to 13% from 16%, and to 9% from 10% for the transport and construction sectors.

With the world’s second largest economy slowing, VAT revenue in the first 11 months of this year fell 4.7% from the same period last year to 6.1 trillion yuan ($840 billion). , as businesses faced weak domestic demand. In November, VAT revenue increased by 1.36%.

“The introduction of VAT reflects the improvement of the economy, as sales and business performance are improving. It can also reflect the recovery of industrial profits, supporting economic development,” Tommy Xie, head of Asia macro research at OCBC, said in a note on Monday. .

($1 = 7.2986 lots)