China: Value Added Tax Law enters into force

On 1 January 2026, the Value-Added Tax (VAT) law enters into force. The law stipulates that the place of supply for cross-border services will be determined based on where services are consumed or whether the provider is in China. Domestic purchasers must generally act as VAT withholding agents for foreign sellers unless a domestic agent is appointed. The law stipulates the obligations of entities and individuals engaged in the sale of goods, services, intangible assets, and real estate within China, including imports, to pay VAT in accordance with the new legislation. The law stipulates the implementation of VAT rates, including a standard rate of 13% for the majority of goods and services, with reduced rates for essential goods and services, and a streamlined tax calculation method for small-scale taxpayers. The law defines taxable transactions as sales of goods, services, intangible assets, or real estate within the country or the importation of goods, with rates ranging from 0% to 13% depending on the type of transaction.