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China VAT measures for COVID-19

  • Mar 25, 2021 | Richard Asquith

25 Mar - China has extended the reduction in the small business cash-based VAT reporting regime until the end of 2021. The rate was reduced from 3% to 1% in 2020, and will now continue until 31 December 2021.

23 May - China has committed to extening all of the below coronavirus VAT measures from the current June withdrawal date to a new deadline of 31 December 2020.

9 May - the State Taxation Administration and Ministry of Finance is extending the COVID-19 VAT measures for small businesses until the end of 2020. This allows all smal businesses to pay VAT on the flat rate scheme at 1% instead of 3%. And small businesses in the Hubei province will be exempted from VAT.

1 May - monthly tax filings and payments due this month have been delayed from 15 to the 22 May. It is possible to request a further extension on a case-by-case situation.

16 April update - importers into spcial zones may delay payments on import VAT and duties until the end of 2020. This is aimed at encouraging them to then sell the goods domestically to cover shortages.

10 April update - interest charges on businesses loans below 1million yuan to small enterprises will be exempted from VAT. Financial services are subject to VAT in China.

8 April update - media is reporting a possible VAT cut for manufacturers from 13% to 10%.

23 March - China has announced a range of Values Added Tax measures to assist businesses during the coronavirus pandemic. These include:

  • Exemption on VAT for small businesses in the Hubei area, the centre of the outbreak in China. Plus a scaling back in collections elsewhere across the country until May
  • Zeroing the VAT rate on medical services, catering and hotel services, sundry personal services (laundry, barbers and nail bars) and public transport. 
  • Various VAT measures for manufacturers of medical equipment needed for the outbreak, including immediate VAT credits.
  • Reduced inspections of taxpayers submissions of electronic invoices.

Follow Avalara’s live global coronavirus Covid-19 VAT measures tracker.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara