VATLive > Blog > China > China prolongs small business loan interest VAT exemption

China prolongs small business loan interest VAT exemption

  • Apr 27, 2020 | Richard Asquith

China has extended the VAT exemption on interest income from loans to small businesses. The aim is to provide continuing support to growth companies and entrepreneurs.

The exemption has been in place since 2017, with a four-year sunset clause. This latest extension takes the relief out to December 2023 according to the Ministry of Finance and State Taxation Administration.

China is one of the few countries to levy Value Added Tax on financial services, including banking loans. Australia also charges VAT on banking and insurance. The EU is reconsidering its blanket exemption.


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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2019 Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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