China VAT e-services

China has not yet modernised its Value Added Tax regime for the business model of foreign providers of electronic services.

There is no scope for foreign VAT registrations

Goods and services are generally only able to be provided by resident businesses, which must VAT register at the branch level. Therefore, foreign providers of e-service may not register for Chinese VAT.

Chinese consumers are generally required to self-assess VAT on any purchases they make. This voluntary tax regime is largely ineffective and has been largely abandoned by other countries.

Challenges to foreign e-services VAT

Whilst China may open up to foreign VAT registrations to prevent tax leakage, there remains several challenges to solve first:

  • The Chinese VAT regime is linked to business incorporation and product licensing systems;
  • The currency is not free floating; and
  • VAT is largely collected and paid on a local level, and it is not clear where non-residents would register or to where they would remit their taxes.

Unraveling the mysteries of Chinese VAT

Webinar: Unraveling the mysteries of Chinese VAT

Join Avalara and KPMG as we review China’s VAT system and how it differs to common VAT systems around the world. 

Latest Chinese news

China further 3% VAT cut to 10%

Oct 12, 2019

China is likely to announce this week that it will cut its main standard VAT rate from 13% to 10%. It has already reduced its VAT rate from 16% to 13% on 1 April 2019. China's economy is slowing rapid

China VAT cut to 13% on tariffs concerns

Mar 4, 2019

China is to cut its standard VAT rate from 16%  to 13% in 2019 to help its manufacturers struggling with US tariffs, slowing global demand and a domestic debt overhang.

China raises VAT registration threshold

January 14, 2019

China has raised its VAT registration threshold from 1 January 2019 from CNY30,000 to CNY100,000 for small businesses. The measure is temporary for the next two years.