The headline
The VAT Law of the PRC and its implementing regulations took effect on 1 January 2026. It is the first time VAT has been set in a national law rather than provisional regulations. For most businesses the rates and mechanics feel familiar, but several rules have changed.
What stayed the same
- Standard rates of 13%, 9% and 6%
- Input VAT credit against output VAT, documented by fapiao
- The split between general and small-scale taxpayers
What changed
- Small-scale taxpayers: businesses with annual taxable sales above RMB 5 million must use the general method, and a general taxpayer generally can’t switch back.
- Anti-avoidance: a general anti-avoidance rule lets tax authorities adjust arrangements without reasonable commercial purpose.
- Cross-border services and intangibles: clearer rules on when sales to or from abroad are taxed in China.
What to check now
- Your taxpayer status and whether it will change as you grow
- Contracts with overseas service providers and the VAT on them
- Group arrangements that exist mainly for tax reasons
Small-scale taxpayers continue to benefit from a reduced 1% rate through 2027. Our accounting & tax team can review your position.
Reviewed by Choi & Partners · 3 October 2026. This page is general information, not legal advice.