On 1 January 2026, China implemented its first
Value-Added Tax Law and supporting implementation regulations,
marking a significant shift in the country's largest tax
category. This legislative upgrade consolidates existing policies
while introducing changes that will impact how businesses operate,
particularly those engaged in cross-border
transactions.
For foreign-invested enterprises and multinational companies,
understanding these changes is essential to maintaining compliance
and optimising tax strategies in China's evolving regulatory
landscape.
Reshaped rules for cross-border transactions
One of the most significant changes under the new VAT framework
is how China treats cross-border services, intangible assets and
financial products. The law now places greater emphasis on where
these are consumed rather than simply where they originate.
