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

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, as adopted at the 13th Session of the Standing Committee of the Fourteenth National People's Congress of the People's Republic of China on December 25, 2024, is hereby issued, and shall come into force on 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
(Adopted at the 13th Session of the Standing Committee of the Fourteenth National People's Congress on December 25, 2024)

Table of Contents
Chapter I General Provisions
Chapter II Tax Rates
Chapter III Tax Amount Payable
Chapter IV Tax Preferences
Chapter V Tax Collection Administration
Chapter VI Supplemental Provisions
Chapter I General Provisions
Article 1 This Law is enacted to improve the value-added tax (“VAT”) system that is conducive to high-quality development, regulate the collection and payment of VAT, and protect the lawful rights and interests of taxpayers.
Article 2 The guidelines and policies of and the decisions and arrangements made by the Party and state shall be implemented in VAT-related taxation work to serve national economic and social development.
Article 3 Entities and individuals (including individual industrial and commercial households) that sell goods, services, intangible assets, or immovables (hereinafter referred to as “engaging in any taxable transactions”), or import goods within the territory of the People's Republic of China (hereinafter referred to as “inside China”) are taxpayers of VAT, and shall pay VAT in accordance with this Law.
“Selling goods, services, intangible assets, or immovables” means paid transfer of ownership of goods or immovables, paid provision of services, or paid transfer of ownership of or rights to use intangible assets.
Article 4 “Engaging in taxable transactions inside China” means that:
1. the places where the goods are loaded for shipment or are located inside China in the case of sale of goods;
2. immovables or natural resources are located inside China in the case of sale or lease of immovables or transfer of the rights to use natural resources;
3. financial commodities are issued inside China, or the sellers are domestic entities or individuals in the case of sale of financial commodities; or
4. services or intangible assets are consumed inside China, or the sellers are domestic entities or individuals in the case of sale of services or intangible assets, except it is otherwise specified in subparagraph 2 or 3 of this article.
Article 5 Any of the following circumstances shall be deemed as a taxable transaction, and VAT shall be paid in accordance with this Law:
1. Entities or individual industrial and commercial households use self-produced goods or goods processed upon commission for collective welfare or personal consumption.
2. Entities or individual industrial and commercial households gratuitously transfer goods.
3. Entities or individuals gratuitously transfer intangible assets, immovables or financial commodities.
Article 6 Any of following circumstances is not a taxable transaction, and shall not be subject to VAT:
1. Employees provide the entities where they are employed or their employers with services for which wages and salaries are obtained.
2. Administrative fees or governmental funds are collected.
3. Compensations are obtained for the expropriation and requisition legally required.
4. Deposit interest income is obtained.
Article 7 As VAT is an off-price tax, the sales amount of a taxable transaction shall exclude VAT. The amount of VAT shall be indicated separately on a transaction voucher in accordance with the provisions issued by the State Council.
Article 8 In the case of any taxable transaction engaged in by a taxpayer, the amount of VAT payable shall be calculated by crediting its input tax against its output tax by using the general tax computation method, except it is otherwise provided for by this Law.
A small-scale taxpayer may calculate the amount of VAT payable through the simple tax computation method, that is, calculating the amount of tax payable on the basis of the sales amount and the levy rate.
The method of calculating VAT on Chinese and foreign enterprises' cooperative exploitation of offshore oil and natural gas, among others, shall be governed by the relevant provisions issued by the State Council.
Article 9 For the purpose of this Law, a “small-scale taxpayer” means a taxpayer whose annual sales amount subject to VAT is not more than five million yuan.
A small-scale taxpayer that has a sound financial accounting system and is able to provide accurate tax-related materials may undergo the registration formalities with the tax authority of jurisdiction, and calculate the amount of VAT payable through the general tax computation method as prescribed in this Law.
Where the national economic and social development so requires, the State Council may make adjustments to the standards for small-scale taxpayers and file them with the Standing Committee of the National People's Congress.
Chapter II Tax Rates
Article 10 VAT rate is:
1. 13%, for taxpayers' sale of goods, labor services of processing, repair or replacement, or tangible movable property leasing services or import of goods, except for those specified in subparagraphs 2, 4 and 5 herein;
2. 9%, for taxpayers' sale of transportation, postal, basic telecommunications, construction, or immovable leasing services, sale of immovables, transfer of the rights to use land, or sale or import of the following goods, except for those specified in subparagraphs 4 and 5 herein:
(1) Agricultural products, edible vegetable oil, and edible salt.
(2) Tap water, heating, cooling, hot water, coal gas, liquefied petroleum gas, natural gas, dimethyl ether, methane, and coal products for residential use.
(3) Books, newspapers, magazines, audio-visual recordings, and electronic publications.
(4) Feeds, fertilizers, pesticide, agricultural machineries, and agricultural films.
3. 6%, for taxpayers' sale of services or intangible assets, except for those specified in subparagraphs 1, 2 and 5 herein.
4. Zero, for taxpayers' export of goods, except it is otherwise provided for by the State Council.
5. Zero, for the sale of services or intangible assets within the scope as prescribed by the State Council by domestic ent......