China issues VAT law

Chinese lawmakers approved a draft law on value-added tax, the country’s largest tax category, on Wednesday, marking progress toward implementing the principle of taxation according to law.

The law, passed during a meeting of the Standing Committee of the National People’s Congress (NPC), will take effect on Jan. 1, 2026, Xinhua News Agency reported.

It is worth noting that 14 of the 18 tax categories already in force in China have been codified, covering most of the tax revenue.

In recent years, China has been implementing deep reforms to the financial and tax system and pushing forward a series of VAT reforms.

“The adoption of the VAT law consolidates the achievements of the VAT reform made in recent years, which helps increase certainty in the tax system, stabilize expectations and enhance confidence, as part of deepening the reform of the financial and tax system,” said Li Shuhong, vice president of the Beijing National Institute of Accounting.

It is noteworthy that the value-added tax revenue in China reached 6.12 trillion yuan (about 851.56 billion dollars) during the first 11 months of this year, representing 37.8% of the total tax revenue in China.