Official Q&A on the VAT Law Implementation Regulations

司法部 财政部 税务总局负责人就《中华人民共和国增值税法实施条例》答记者问

Source (Chinese): STA Policy Database — 政策解读

English translation: Independent translation. Not an official government translation. Published: December 25, 2025.

On December 25, 2025, Premier Li Qiang signed State Council Decree No. 826, promulgating the Implementation Regulations of the Value-Added Tax Law of the People's Republic of China (hereinafter "the Regulations"), effective January 1, 2026. Recently, officials from the Ministry of Justice (MOJ), the Ministry of Finance (MOF), and the State Taxation Administration (STA) answered press questions regarding the Regulations.

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Q1: What is the background for formulating the Regulations?

Question: Please briefly describe the background for formulating the Regulations.

Answer: The CPC Central Committee and the State Council attach great importance to VAT legislation and reform. The Third Plenary Session of the 20th CPC Central Committee called for improving the tax system in a manner conducive to high-quality development, social equity, and market unification, and for optimizing the structure of the tax system. The Fourth Plenary Session of the 20th CPC Central Committee called for standardizing preferential tax policies and maintaining a reasonable level of macro tax burden.

VAT covers all industries and all links of the national economy and is currently China's largest tax category. In 1993, the State Council formulated and promulgated the Provisional Regulations of the People's Republic of China on Value-Added Tax (hereinafter "the Provisional Regulations"), after which MOF and the STA formulated the Detailed Rules for Implementation of the Provisional Regulations on Value-Added Tax, serving as supporting rules to the Provisional Regulations. In December 2024, the 13th Session of the Standing Committee of the 14th National People's Congress deliberated and adopted the Value-Added Tax Law of the People's Republic of China (hereinafter "the VAT Law"), effective January 1, 2026, simultaneously repealing the Provisional Regulations.

To ensure the effective implementation of the VAT Law, further improve the relevant institutional measures, and enhance the operability of the tax system, it was necessary to formulate the Regulations, thereby establishing a well-coordinated and fully integrated VAT institutional framework.

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Q2: What is the significance of the Regulations?

Question: In what respects is the significance of formulating the Regulations reflected?

Answer: The significance is mainly reflected in the following three aspects:

1. Implementing the principle of taxation by law. The Regulations help ensure the effective implementation of the VAT Law, enhance the operability of the tax system, establish a well-coordinated and fully integrated VAT institutional framework, and improve the VAT system in a manner conducive to high-quality development.

2. Promoting fairness in tax administration. The Regulations set out provisions on the elements of the VAT system, preferential policies, and tax collection and administration, ensuring that the VAT system is unified, standardized, and operable nationwide, safeguarding fair competition, and promoting the construction of a unified national market.

3. Stabilizing market expectations. The Regulations further refine and clarify the relevant provisions of the VAT Law, stabilize market expectations, and help create a world-class business environment that is market-oriented, law-based, and internationalized.

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Q3: What is the overall approach to formulating the Regulations?

Question: What is the overall approach to formulating the Regulations?

Answer: The overall approach is guided by the following three principles:

1. Comprehensively implementing the VAT Law. The Regulations refine and further clarify the institutional arrangements under the VAT Law and matters delegated to the State Council for regulation.

2. Maintaining tax system continuity. Effective institutional measures from existing rules have been incorporated into the Regulations, without imposing new burdens on taxpayers.

3. Adopting a balanced approach. While adhering to the basic tax system elements and policy boundaries established by the VAT Law, the Regulations also leave room for practical operation. MOF and the STA are authorized to formulate relevant supporting measures, and it is expressly required that important supporting measures shall be implemented only after approval by the State Council.

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Q4: How do the Regulations refine the scope of VAT taxation?

Question: What refinements has the Regulations made regarding the scope of VAT taxation?

Answer: The Regulations provide detailed definitions of "goods," "services," "intangible assets," and "immovable property" as referred to in Article 3 of the VAT Law:

1. Goods include tangible movable property, electricity, heating, gas, and similar items.

2. Services include transportation services, postal services, telecommunications services, construction services, financial services, as well as lifestyle and production services such as information technology services, cultural and sports services, and attestation and consulting services.

3. Intangible assets are assets that lack physical form but can generate economic benefits, including technology, trademarks, copyrights, goodwill, natural resource usage rights, and other intangible assets.

4. Immovable property refers to assets that cannot be moved, or whose nature or shape would change upon being moved, including buildings, structures, and similar items.

MOF and the STA will issue supporting documents to further specify the detailed scope of goods, services, intangible assets, and immovable property, which shall be published and implemented after approval by the State Council.

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Q5: How do the Regulations standardize VAT preferential policies?

Question: Regarding the standardization of VAT preferential policies, what provisions has the Regulations made?

Answer: The Fourth Plenary Session of the 20th CPC Central Committee called for standardizing preferential tax policies. The Regulations primarily address this in the following three aspects:

1. Clarifying specific standards for exempt items. The Regulations specify the detailed criteria for VAT-exempt items listed in the VAT Law, such as those for agricultural producers, agricultural products, and medical institutions.

2. Requiring public disclosure. The applicable scope, standards, conditions, and other details of VAT preferential policies shall be promptly disclosed to the public in accordance with the law.

3. Establishing a review and evaluation mechanism. MOF and the STA shall conduct timely studies and assessments of the effectiveness of VAT preferential policies. Where a preferential policy is no longer suited to the needs of national economic and social development, it shall be promptly reported to the State Council for adjustment and improvement.

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Q6: How do the Regulations standardize export VAT refund/exemption?

Question: Regarding the standardization of export VAT refund/exemption, what provisions has the Regulations made?

Answer: Article 33 of the VAT Law authorizes the State Council to formulate specific measures for export VAT refund/exemption. To implement the VAT Law and ensure that export VAT refund/exemption is conducted in a standardized manner, the Regulations set out provisions on:

• The calculation methods for export VAT refund/exemption;
• The filing deadlines;
• The principles for handling cases where a taxpayer voluntarily waives the application of export VAT refund/exemption.

The Regulations also authorize MOF and the STA to formulate detailed operational measures for export VAT refund/exemption.

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Q7: How will MOF and the STA ensure effective implementation of the Regulations?

Question: How will MOF and the STA ensure that the Regulations are effectively implemented?

Answer: To ensure the effective implementation of the Regulations, MOF and the STA will focus on the following three areas of work:

1. Promptly improving supporting rules. MOF and the STA will formulate specific operational measures for input tax credit on long-term assets, tax prepayment, export VAT refund/exemption, and other matters, further refining policy content and unifying implementation standards. The STA will also issue supporting tax collection and administration announcements to further clarify specific operational matters related to tax collection and administration.

2. Upgrading information systems. Tax information systems will be upgraded and improved in accordance with policy adjustments, and system modifications and functional testing will be completed in a timely manner. Efficient service channels will be provided, including policy guidance, streamlined filing, and intelligent verification, to maximize the convenience of tax services for taxpayers.

3. Conducting extensive training and guidance. Through various channels, the Regulations will be widely publicized. Training and guidance programs will be organized to provide taxpayers with policy interpretation, Q&A consultation services, and other forms of assistance, and taxpayer concerns will be addressed in a timely manner.