VATLive > Blog > Asia > China VAT reforms

China VAT reforms

  • Jan 6, 2020 | Richard Asquith

China has proposed an update to its Value Added Tax Law. This has now gone out to public consultation by the Ministry of Finance and State Taxation Administration. This aim is to implement the proposed measures sometime during 2020.

These amendments build on the overhaul of the Chinese VAT regime, completed in 2016. They include:

  • Withdrawal of 5% VAT rate
  • Reform of the 3% flat rate scheme for businesses below the VAT registration threshold
  • Simplifications around the mixed goods and services rules
  • Introduction of a VAT credit refund pilot. At present, taxpayers cannot apply for refunds of surplus VAT payments
  • Clarifying that VAT is only due where a non-resident service provider is involved when the service is actually consumed in China by a resident. Currently, the service may be consumed offshore and be liable. 
  • Simplifying the VAT deadlines to just monthly or quarterly filings. At present, many taxpayers must submit returns on a stagger
  • Introduction of limited-use VAT groups
  • A new definition for ‘deemed supply’ VAT liability for self-supply and goods provided free of charge 
  • Clarification of financial services provided by resident providers as being subject to VAT

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.

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 is part of the European leadership team which this year won International Tax Review's 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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