After the implementation of the Value-Added Tax Law in China, VAT preferential policies will be extended.
On Saturday (January 31), China's Ministry of Finance and State Taxation Administration issued an announcement clarifying the connecting matters of VAT preferential policies after the implementation of the VAT Law. While keeping the overall tax burden basically stable, the announcement aims to standardize and optimize the current VAT preferential policy system.
Starting from January 1, 2026, VAT exemption will be applied to 21 items including the sale of self-produced agricultural products by agricultural producers and the provision of medical services by medical institutions. This includes: revenue obtained by Taiwanese shipping companies and airlines from cross-strait direct sea and air transportation business in mainland China; revenue obtained by Hong Kong market investors (including institutions and individuals) from trading stocks and funds, specifically: revenue from trading Shenzhen Stock Exchange listed A-shares through the Shenzhen-Hong Kong Stock Connect, revenue from trading Shanghai Stock Exchange listed A-shares through the Shanghai-Hong Kong Stock Connect, and revenue from trading mainland fund shares through mutual recognition of funds.
Items exempt from VAT also include the provision of ship inspection services in China by the American Bureau of Shipping (ABS), as long as its non-profit purpose remains unchanged and the China Classification Society enjoys the same exemption in the United States.
Items exempt from VAT also include the provision of ship inspection services in China by the American Bureau of Shipping (ABS), as long as its non-profit purpose remains unchanged and the China Classification Society enjoys the same exemption in the United States.
From January 1, 2026, to December 31, 2027, VAT exemption will also be applied to 26 items including agricultural production materials and the transfer of copyrights by individuals.
From January 1, 2026, to December 31, 2027, for taxable transactions conducted by small-scale taxpayers, where a month is used as a tax period, the threshold for VAT liability will be a monthly sales amount of 100,000 yuan (RMB, about 18,300 SGD); where a quarter is used as a tax period, the threshold will be a quarterly sales amount of 300,000 yuan. For tax payments on a per-transaction basis, the threshold will be a sales amount of 1,000 yuan per transaction (per day).
The two departments also clarified the projects that use simplified taxation methods and other VAT preferential items.