Adnan Akgöz, the Commercial Counselor at the Turkish Embassy in Beijing, provided information to Turkish citizens regarding China’s new VAT law. Akgöz stated that the People’s Republic of China (PRC) has published two fundamental documents regulating the new Value Added Tax (VAT) system, effective January 1, 2026, and explained the content of these regulations. Here is his explanation:
VAT Law (Adopted by the National People’s Congress on December 25, 2024, and approved by the National State Council on December 25, 2025) – Forms the basic legal framework. [Link to regulation]
VAT Implementation Regulation (Decision No. 826 of the State Council of the People’s Republic of China, adopted at the meeting on December 19, 2025, and published on December 25, 2025) – Regulates the basic implementation details of the VAT Law. [Link to regulation]
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These regulations cover all natural and legal persons engaged in the sale of goods/services, transfer of intangible rights, and import/export in China.
BASIC REGULATIONS
- Taxpayer Classification
-General Taxpayers: Those with an annual turnover exceeding 5 million RMB
-Small-Scale Taxpayers: Those with annual VAT sales not exceeding 5 million RMB (simplified method)
-Natural persons are automatically considered small-scale taxpayers. The State Council may adjust the standards for small-scale taxpayers. - Tax Rates
-13%: Standard rate (sale of goods, repair and maintenance services, machinery rental, import (general rate))
-9%: Reduced rate (a tax rate of 9% will be applied to taxpayers selling or importing goods such as transport, postal and telecommunication services, construction, real estate and the following goods)
1-Agricultural products, edible vegetable oil, edible salt;
2-Tap water, heating, air conditioning, hot water, gas, liquefied petroleum gas, natural gas, dimethyl ether, -biogas and residential coal products;
3-Books, newspapers, magazines, audiovisual products, electronic publications;
4-Feed, fertilizer, pesticides, agricultural machinery, agricultural film.
-6%: Services and intangible rights other than those listed above
-0%: Exports and supported services
-3% Rate used in the simplified tax calculation method - Tax Calculation and Deduction
-Input tax deduction: Amounts proven with applicable VAT invoices
–Expenses not subject to deduction: Loan interest, entertainment expenses, lost goods
-Long-term assets: Below 5 million RMB: Full deduction, Above 5 million RMB: Gradual deduction
Click here for the original Chinese text of the VAT Law.
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