Implementation Regulations of the Value-Added Tax Law of the People's Republic of China

Chapter 1 General Provisions

Article 1 　These Regulations are formulated in accordance with the Value-Added Tax Law of the People’s Republic of China (hereinafter referred to as the VAT Law).

Article 2 　The goods referred to in Article 3 of the Value-Added Tax Law include tangible movable property, electricity, heat, gas, and the like.

The services referred to in Article 3 of the Value-Added Tax Law include transportation services, postal services, telecommunications services, construction services, financial services, as well as production and living services such as information technology services, cultural and sports services, and certification and consulting services.

The intangible assets referred to in Article 3 of the Value-Added Tax Law are assets that do not have a physical form but can generate economic benefits. These include technology, trademarks, copyrights, goodwill, rights to use natural resources, and other intangible assets.

According to Article 3 of the Value-Added Tax Law, “real estate” refers to assets that cannot be moved or whose nature and shape would be altered if moved, including buildings and structures.

The financial and tax authorities under the State Council shall propose specific scopes for goods, services, intangible assets, and real estate, submit them to the State Council for approval, and then promulgate and implement them upon approval.

Article 3 　The term “entity” as referred to in Article 3 of the Value-Added Tax Law includes enterprises, administrative organs, public institutions, military units, social organizations, and other entities.
The individuals referred to in Article 3 of the Value-Added Tax Law include individual business operators and natural persons.

Article 4 　The consumption of services and intangible assets within the territory, as referred to in Article 4, Item 4 of the Value-Added Tax Law, refers to the following circumstances:

(1) Services and intangible assets sold by overseas entities or individuals to domestic entities or individuals, excluding services consumed on-site overseas;

(2) Services and intangible assets sold by overseas entities or individuals are directly related to goods, real estate, and natural resources located within the territory.

(3) Other circumstances prescribed by the financial and tax authorities under the State Council.

Article 5 　Taxpayers issuing special value-added tax invoices shall separately indicate the sales amount and the value-added tax amount.

Article 6 Taxpayers who use the general tax calculation method are considered general taxpayers.

General taxpayers are subject to a registration system, and the specific registration procedures shall be formulated by the tax authority under the State Council.

Article 7 　Natural persons are classified as small-scale taxpayers. Non-enterprise entities that do not frequently engage in taxable transactions and whose primary business activities do not fall within the scope of taxable transactions may choose to pay taxes as small-scale taxpayers.

Chapter 2: Tax Rates

Article 8 　The export goods referred to in Article 10, Item 4 of the Value-Added Tax Law are those goods that have been declared to customs, actually left the country, and sold to entities or individuals outside China, as well as those goods that the State Council has designated as being treated as exports.

Article 9 　Units or individuals within the territory that engage in cross-border sales of the following services and intangible assets shall be subject to a zero tax rate:

(1) R&D services, contract energy management services, design services, broadcasting and film production and distribution services, software services, circuit design and testing services, information system services, business process management services, and offshore service outsourcing services sold to entities located outside China, all of which are consumed entirely overseas;

(2) Technologies transferred to overseas entities that are used entirely overseas;

(3) International transportation services, aerospace transportation services, and foreign repair and maintenance services.

Article 10 　The taxable transactions referred to in Article 13 of the Value-Added Tax Law shall simultaneously meet the following conditions:

(1) Involves two or more transactions subject to different tax rates and collection rates;

(2) The businesses have a clear principal-subordinate relationship. The principal business occupies the dominant position and reflects the substance and purpose of the transaction; the subsidiary business is a necessary complement to the principal business and is predicated on the occurrence of the principal business.

Chapter 3: Taxable Amount

Article 11 　The value-added tax (VAT) deduction certificates referred to in Article 16 of the VAT Law shall comply with the relevant provisions of the tax authorities under the State Council. Specifically, these include special VAT invoices, special payment receipts for imported VAT issued by customs, tax clearance certificates, agricultural product purchase invoices, agricultural product sales invoices, and other deduction certificates that have the function of offsetting input tax amounts.

Article 12 　The input tax amount that taxpayers deduct from their output tax amount using VAT credit certificates includes:

(1) The value-added tax amount indicated on the special value-added tax invoice obtained from the seller;

(2) The value-added tax amount indicated on the special payment receipt for import VAT obtained from the customs;

(3) The value-added tax amount indicated on the tax payment certificates obtained from purchasing services, intangible assets, or domestic real estate from entities or individuals outside China;

(4) When purchasing agricultural products, except for those obtaining a special value-added tax invoice or a special payment receipt for import value-added tax issued by the customs, the input tax amount shall be calculated based on the agricultural product purchase invoice or the agricultural product sales invoice, unless otherwise provided by the State Council.

(5) The value-added tax amount indicated on or included in other VAT deduction certificates obtained from the seller.

Article 13 　If a taxpayer calculates and pays value-added tax using the general taxation method, the value-added tax amount refunded to the purchaser due to sales discounts, terminations, or returns shall be deducted from the output tax for the current period; the value-added tax amount recovered due to sales discounts, terminations, or returns shall be deducted from the input tax for the current period.

Article 14 　If a taxpayer calculates and pays value-added tax using the simplified taxation method, the sales amount refunded to the purchaser due to sales discounts, terminations, or returns shall be deducted from the current period’s sales amount. If, after deducting the current period’s sales amount, there is still an overpayment of tax, such overpayment may be deducted from subsequent tax liabilities or, in accordance with regulations, applied for a refund.

Article 15 　The total price referred to in Article 17 of the Value-Added Tax Law does not include the following taxes, fees, or charges collected on behalf of the taxpayer:

(1) Government funds or administrative and public service charges;

(2) Consumption tax incurred on consumer goods subject to consumption tax that are processed under consignment;

(3) Vehicle Purchase Tax and Vehicle and Vessel Tax;

(4) Issuing invoices in the name of the client and collecting payments on behalf of the client.

Article 16 　If a taxpayer adopts the method of combining sales revenue and value-added tax amount into a single price, the sales revenue shall be calculated according to the following formula:

Sales under the general tax calculation method = Tax-inclusive sales amount ÷ (1 + tax rate)

Sales under the simplified tax calculation method = Tax-inclusive sales amount ÷ (1 + levy rate)

Article 17 If a taxpayer settles sales proceeds in a currency other than RMB, when converting such proceeds into RMB for calculation purposes, the taxpayer may choose either the central parity rate of the RMB effective on the date the sales occurred or on the first day of the month in which the sales occurred. Once a taxpayer has determined the conversion rate, it cannot be changed within 12 months.

Article 18 　If a taxpayer falls under the circumstances specified in Article 20 of the Value-Added Tax Law, the tax authority may determine the sales amount in the following order:

(1) Determined based on the average price of similar goods, services, intangible assets, or real estate sold by the taxpayer in the most recent period;

(2) Determined based on the average price of similar goods, services, intangible assets, or real estate sold by other taxpayers during the most recent period;

(3) Determined based on the taxable price composition. The formula for the taxable price composition is:

Taxable price = Cost × (1 + Cost Profit Margin) + Consumption Tax Amount

In the formula, the cost-profit margin is set at 10%. The tax authority under the State Council may adjust the cost-profit margin based on the actual cost-profit conditions of specific industries.

Article 19 　The “abnormal losses” referred to in Article 22, Paragraph 3 of the Value-Added Tax Law refer to situations where goods are stolen, lost, or become moldy and spoiled due to poor management, as well as cases where goods or real estate are lawfully confiscated, destroyed, or demolished because of violations of laws and regulations.

The items referred to in Article 22, paragraph 3 of the Value-Added Tax Law that constitute abnormal losses include:

(1) Goods purchased that have suffered abnormal losses, as well as the processing, repair, and maintenance services and transportation services related to such goods;

(2) Purchased goods (excluding fixed assets), processing, repair, and maintenance services, and transportation services consumed by work-in-process and finished products that have suffered abnormal losses;

(3) Real estate that has suffered abnormal losses, as well as the purchased goods and construction services consumed by such real estate;

(4) Goods purchased and construction services consumed by real estate under construction that have suffered abnormal losses. Real estate under construction includes real estate that taxpayers are newly constructing, renovating, expanding, repairing, or decorating.

The goods referred to in subparagraphs (3) and (4) of paragraph 2 of this article refer to materials and equipment that constitute the physical substance of real estate, including architectural decoration materials as well as plumbing, drainage, heating, sanitation, ventilation, lighting, communications, gas supply, fire protection, central air conditioning, elevators, electrical systems, photovoltaic power generation systems, intelligent building equipment, and supporting facilities.

Fixed assets referred to in these Regulations shall mean machinery, equipment, transportation vehicles, and other devices, tools, and instruments related to production and business operations that have a useful life exceeding 12 months.

Article 20 　The entertainment and socializing expenses of taxpayers are considered personal consumption under the Value-Added Tax Law.

Article 21 　The input tax corresponding to interest expenses incurred by taxpayers for loan services, as well as expenses such as investment and financing advisory fees, handling fees, and consulting fees paid directly to the lender in connection with these loan services, may not yet be deducted from the output tax.

The financial and tax authorities under the State Council shall, in a timely manner, study and evaluate the effectiveness of the policy according to which the input tax corresponding to interest and related expenses incurred on purchased loan services may not be deducted from the output tax.

Article 22 　If a taxpayer purchases goods, services, intangible assets, or real estate for non-taxable transactions that simultaneously meet the following conditions (hereinafter collectively referred to as “non-deductible non-taxable transactions”), the corresponding input tax amount may not be deducted from the output tax amount:

(1) Engaging in business activities falling outside the scope of Articles 3 to 5 of the Value-Added Tax Law and obtaining economic benefits, whether monetary or non-monetary, related to such activities;

(2) Does not fall under the circumstances specified in Article 6 of the Value-Added Tax Law.

Article 23 　For general taxpayers, when purchasing goods (excluding fixed assets) and services that are used for projects taxed under the simplified tax calculation method, projects exempt from value-added tax, or non-taxable transactions for which input tax credits cannot be allocated and thus remain uncredited, the amount of input tax credit that is not deductible for the current period shall be calculated periodically based on the proportion of sales or revenue. Such amounts shall then be summarized and settled during the tax filing period in January of the following year.

Article 24 　If goods purchased (excluding fixed assets) and services for which input tax credits have already been claimed fall under the circumstances specified in Article 22, items 3 through 5 of the Value-Added Tax Law, the corresponding input tax credits shall be deducted from the current period’s input tax credits. If the corresponding input tax credits cannot be determined, the deductible input tax credits shall be calculated based on the actual cost incurred in the current period.

Article 25 　If a general taxpayer acquires fixed assets, intangible assets, or real estate (hereinafter collectively referred to as "long-term assets") that are used both for projects subject to the general tax calculation method and for projects subject to the simplified tax calculation method, value-added tax-exempt projects, non-deductible transactions not subject to tax, collective welfare purposes, or personal consumption (hereinafter collectively referred to as the "five categories of non-deductible items"), such long-term assets shall be deemed to be used for mixed purposes. The corresponding input tax amount shall be handled in accordance with the Value-Added Tax Law and the following provisions:

(1) For individual long-term assets with an original value not exceeding 5 million yuan, the input tax amount corresponding to these assets can be fully deducted from the output tax amount.

(2) For individual long-term assets with an original value exceeding 5 million yuan, the input tax amount shall be fully deducted upon acquisition. Thereafter, during the period when these assets are used for mixed purposes, the input tax amounts that are not deductible from the output tax shall be calculated annually based on adjusted depreciation periods, corresponding to the five categories of items ineligible for deduction.
The specific procedures for deducting input tax on long-term assets shall be formulated by the financial and tax authorities under the State Council.

Chapter 4: Tax Incentives

Article 26 　The agricultural producers referred to in Article 24, Paragraph 1, Item 1 of the Value-Added Tax Law are entities and individuals engaged in agricultural production; agricultural products refer to primary agricultural products.

Article 27 　The medical institutions referred to in Article 24, Paragraph 1, Item 2 of the Value-Added Tax Law are those established in accordance with relevant regulations and possessing the qualification to practice as medical institutions, including medical institutions at all levels and of all types under the military and the Armed Police Force. Such institutions do not include for-profit cosmetic medical institutions.

Article 28 　The antique and used books referred to in Article 24, Paragraph 1, Item 3 of the Value-Added Tax Law are those antique and used books acquired from the public.

Article 29 　The daycare centers and kindergartens referred to in Article 24, Paragraph 1, Item 7 of the Value-Added Tax Law are institutions established in accordance with relevant regulations and holding qualifications for childcare or preschool education. The income exempt from value-added tax refers to childcare fees and childcare education fees within the limits prescribed by the relevant fee standards. Elderly care institutions are various types of institutions established in accordance with relevant regulations, providing centralized accommodation and care services for the elderly. Disability service institutions are institutions established in accordance with relevant regulations, specifically providing relevant services for persons with disabilities.

Article 30 　The “schools” referred to in Article 24, Paragraph 1, Item 8 of the Value-Added Tax Law shall mean institutions established in accordance with relevant regulations and providing academic education, as well as technical schools, advanced technical schools, and technician colleges.

Article 31 　The ticket revenue referred to in Article 24, Paragraph 1, Item 9 of the Value-Added Tax Law refers to the revenue from the first-entry ticket.

Article 32 　The scope, standards, and conditions for applying the value-added tax preferential policies shall be promptly disclosed to the public in accordance with the law.

Article 33 　The financial and tax authorities under the State Council shall, in a timely manner, study and evaluate the effectiveness of the value-added tax preferential policies. For those preferential policies that no longer meet the needs of national economic and social development, they shall promptly submit proposals to the State Council for adjustment and improvement.

Chapter 5: Collection and Management

Article 34 　If a unit operates through contracting, leasing, or reliance arrangements, and the contractor, lessee, or reliant party conducts business externally in the name of the contracting party, lessor, or relied-upon party, with the contracting party, lessor, or relied-upon party assuming the corresponding legal liabilities, then the contracting party, lessor, or relied-upon party shall be the taxpayer. In all other circumstances, the contractor, lessee, or reliant party shall be the taxpayer.

In the course of operating asset management products, if taxable transactions occur, the asset management product manager shall be the taxpayer. If there are other provisions stipulated by law, those provisions shall prevail.

Article 35 　If a natural person engages in a taxable transaction that meets the prescribed requirements, the domestic entity making the payment shall serve as the withholding agent. The specific procedures for withholding and remitting taxes shall be formulated by the financial and tax authorities under the State Council.

If a foreign entity or individual leases domestic real estate to a natural person and has a domestic agent, the domestic agent shall file and pay the tax on behalf of the lessee.

Article 36 　Unless otherwise provided in these Regulations, entities and individual business operators whose annual taxable sales of value-added tax exceed the threshold for small-scale taxpayers shall register as general taxpayers with the competent tax authority and, starting from the period in which the threshold is exceeded, shall calculate and pay value-added tax using the general taxation method.

Small-scale taxpayers who meet the requirements stipulated in Article 9, Paragraph 2 of the Value-Added Tax Law may apply to the competent tax authority for registration as a general taxpayer and, starting from the period in which such registration is completed, shall calculate and pay value-added tax using the general taxation method.

After a taxpayer registers as a general taxpayer, it may not switch back to being a small-scale taxpayer.

Article 37 　When a taxpayer engages in a taxable transaction, it shall issue an invoice to the purchaser. Under any of the following circumstances, a special VAT invoice may not be issued:

(1) The purchaser of the taxable transaction is a natural person;

(2) Taxable transactions are exempt from value-added tax;

(3) Other circumstances prescribed by the financial and tax authorities under the State Council.

Article 38 　If a taxpayer engages in a taxable transaction and issues a special value-added tax invoice, but subsequently encounters situations such as errors in invoicing or the need for sales discounts, terminations, or returns, the taxpayer shall, in accordance with the regulations of the tax authority under the State Council, either invalidate the original invoice or issue a red-character special value-added tax invoice. Failure to invalidate the original invoice or issue a red-character special value-added tax invoice as required shall result in the taxpayer being ineligible to deduct the output tax amount or reduce the sales amount pursuant to Articles 13 and 14 of these Regulations.

Article 39 　The “receipt of sales proceeds” referred to in Article 28, Paragraph 1, Item 1 of the Value-Added Tax Law means that the taxpayer receives payment either during or after the occurrence of a taxable transaction. The day on which the sales proceeds are received and the corresponding voucher is obtained shall be the payment date specified in the written contract. If no written contract has been signed or the written contract does not specify a payment date, such day shall be the date on which the taxable transaction is completed—namely, the day when the goods are dispatched, the service is rendered, ownership of financial instruments is transferred, the transfer of intangible assets is completed, or the transfer of real estate is completed.

Article 40 The “day on which a deemed taxable transaction is completed,” as referred to in Article 28, Paragraph 1, Item 2 of the Value-Added Tax Law, refers to the day when goods are dispatched, ownership of financial instruments is transferred, intangible assets are transferred, or real estate is transferred.

Article 41 　If a taxpayer exports goods and the date of customs declaration for export precedes the time when the tax liability arises as stipulated in Article 28, Paragraph 1, Items 1 and 2 of the Value-Added Tax Law, the tax liability shall arise on the day the goods are declared for export.

Article 42 　The provision in Article 29, Paragraph 1 of the Value-Added Tax Law, which states that with approval from the financial and tax authorities at or above the provincial level, the head office may file and pay taxes on a consolidated basis, refers to taxpayers who have fixed production and business premises and whose head office and branches are located in different provinces (autonomous regions or municipalities directly under the central government). With approval from the financial and tax authorities under the State Council, such taxpayers may have their head office file and pay taxes on a consolidated basis to the tax authority in charge of the head office’s location. If the head office and its branches are located within the same province (autonomous region or municipality directly under the central government) but not in the same county (city, district, or banner), with approval from the financial and tax authorities of the province (autonomous region or municipality directly under the central government), the head office may file and pay taxes on a consolidated basis to the tax authority in charge of the head office’s location.

Article 43 　The following taxpayers may apply the quarterly tax period stipulated in Article 30 of the Value-Added Tax Law:

(1) Small-scale taxpayers;

(2) Banks, finance companies, trust companies, and credit cooperatives among general taxpayers;

(3) Other taxpayers designated by the tax and finance authorities under the State Council.

Article 44 Taxpayers subject to taxation on a per-transaction basis, whose sales reach the threshold for tax liability, shall file their tax returns from the date on which the tax obligation arises until June 30 of the following year.

Article 45 　The following situations shall be subject to advance tax payments as required:

(1) Providing construction services across prefectural-level administrative divisions (county-level districts under direct-administered municipalities);

(2) Providing construction services on a prepayment basis;

(3) Selling real estate projects through pre-sales;

(4) Transferring or leasing real estate located in a county (city, district, or banner) that is different from the taxpayer’s place of business;

(5) Oil and gas field enterprises providing services related to the sale and production of crude oil and natural gas across provinces, autonomous regions, and municipalities directly under the central government.

The specific procedures for the advance tax payments stipulated in paragraph 1 of this article shall be formulated by the financial and tax authorities under the State Council.

Article 46 　Where the head office is approved by the financial and tax authorities at or above the provincial level to file and pay taxes on a consolidated basis, the approving authority may stipulate that branch offices make advance payments of taxes.

Article 47 　When taxpayers export goods or provide cross-border sales of services and intangible assets (hereinafter collectively referred to as "export operations") and file applications for refund (or exemption) of taxes in accordance with Article 33 of the Value-Added Tax Law, the refund (or exemption) amount shall be calculated using either the exemption-offset-refund method or the exemption-refund method, at the export tax refund rate prescribed by the State Council. After review and approval by the tax authorities, the refund (or exemption) shall be processed.

The exemption-and-credit-refund method refers to exempting value-added tax at the export stage, using the corresponding input tax credits to offset the value-added tax payable, and refunding any remaining uncredited amount. The exemption-and-refund method refers to exempting value-added tax at the export stage and refunding the corresponding input tax credits.

Article 48 　Taxpayers engaged in export transactions eligible for tax refunds (exemptions) or VAT exemptions shall file their declarations within the prescribed time limits. If they fail to file within the deadline, they shall pay VAT as if the goods had been sold domestically.
If a taxpayer exports goods through an agency arrangement, it shall handle the agency export procedures in accordance with the regulations of the tax authority under the State Council. The principal shall file and process the application for export refund (exemption) of taxes, exemption from value-added tax, or payment of value-added tax as required. If the agency export procedures have not been completed, the shipper of the exported goods shall file and pay the value-added tax as prescribed.

Article 49 　Taxpayers engaged in export transactions eligible for refund (or exemption) of taxes may choose to waive the refund (or exemption) and instead opt for exemption from value-added tax or payment of value-added tax. Starting from the month following the date on which the taxpayer waives the refund (or exemption), export transactions previously eligible for refund (or exemption) will be exempt from value-added tax or will be subject to value-added tax payments as prescribed.
Taxpayers engaged in export transactions eligible for VAT exemption may choose to waive the VAT exemption and instead opt to pay VAT. Starting from the month following the date on which they waive the VAT exemption, their export transactions previously eligible for VAT exemption will be subject to VAT payment as prescribed.
Taxpayers who waive the refund (exemption) of tax or exemption from value-added tax on export transactions may not again apply for such refund (exemption) or exemption within 36 months.

Article 50 　If a taxpayer engages in export transactions that have been eligible for tax refunds or exemptions and subsequently experiences sales discounts, terminations, or returns, the taxpayer shall repay the tax refunds or exemptions already received.

Article 51 　The specific operational procedures for the refund (or exemption) of value-added tax on exports shall be formulated by the financial and tax authorities under the State Council.

Article 52 　Tax authorities may, in accordance with the law, obtain from relevant entities and individuals information related to logistics, customs clearance, cargo transportation agency, fund settlement, and other matters pertinent to the administration of export tax collection. Such entities and individuals shall provide this information. Tax authorities and their staff members shall keep the relevant information confidential and may not use it for purposes other than tax collection and administration. Where otherwise provided by laws or administrative regulations, the provisions thereof shall prevail.

Article 53 　If a taxpayer engages in arrangements that lack a reasonable commercial purpose and thereby reduces, exempts, or defers the payment of value-added tax, or prematurely obtains or over-receives tax refunds, the tax authorities may make adjustments in accordance with the provisions of the "Tax Collection and Administration Law of the People's Republic of China" and relevant administrative regulations.

Chapter VI Supplementary Provisions

Article 54 　This regulation shall take effect on January 1, 2026.