1984 is the year the VAT was introduced in China. The standard Value Added Tax in China is set at 13% rate
since April 2019 and it is imposed on a series of products and services offered on the market. There are also other types of VAT rates imposed on particular types of services and goods, but for information about what taxes you need to consider when opening a company in China
, we suggest you talk to one of our company formation specialists in China
. Our advisors can help foreign investors open companies in this country by guiding them throughout the entire procedure.
What is the VAT rate in China?
The standard VAT rate in China is set at 13%
and it is applied to the sales of products and services in this country, and also on the import of goods. Additionally, a low VAT rate of 10%
is applicable for the important food categories (agriculture products, dairy, cereals, meat, fruits vegetables), for newspapers and magazines, water supply, heating. It is good to know that a VAT rate of 9%
is imposed on accommodations, real estate and construction, restaurants, communication, logistics, and transportation in China
What are other VAT rates imposed in China?
The VAT system in China has been revised in 2018 and then applied in 2019, and the State Administration of Taxation wanted to simplify the legislation in this sense. The following table contains other goods and services for which the VAT needs to be paid:
Financial services, insurance
Chinese National Education
For a proper understanding of the VAT rates imposed in China
at the time of company incorporation in China
, we recommend you address your inquiries to our Chinese company formation agents
Taxpayers in China
Companies with activities in China
are considered taxpayers, and according to the tax structure in this state, there are two main categories of businesses which must apply for the general taxpayer status, such as:
• general taxpayers with incomes ranging between USD 500,000 and 5 million;
• small-scale taxpayers with incomes below USD 500,000.
It is good to know that there are also VAT exemptions for the export of goods, meaning that companies with operations in this area will not pay such tax.
Who needs to register for VAT in China?
Small entrepreneurs and companies in China
need to register for VAT
. Particular exports of goods from China, reprocessed products in China, the import of products in China and installations in China are subject to the value added tax. Companies dealing with the sale of goods and services in China must be registered for taxation, including for VAT. It is important to know that non-traders with activities in China cannot register for VAT
as non-resident traders like it’s the case of European countries. This means that a legal representative with residency in China needs to be appointed in order to register for such a tax and to report the accounting obligations. A Wholly Foreign-Owned Enterprise
is recommended for international investors in China, with the mention that registering for VAT will be possible. If you would like to open a company in China
and to register for VAT in China
, do not hesitate to talk to one of our company formation agents in China
VAT registration threshold in China
The financial authorities agreed in 2018 for the new threshold for VAT registration in China
, increased from CNY 30,000 to CNY 100,000, helping small companies in the country, for at least 2 years. This new tax rule is considered an important tax incentive to bolster the Chinese economy. Alongside this significant tax modification, the stamp duty has been eliminated, and the corporate income tax
was reduced from 25% to 20% for small enterprises in China
. Also, the reduction of local education taxes on businesses has been recently implemented in China. For complete information about the taxation system in China, you should talk to one of our company formation representatives in China
VAT registration in China
Once the company is incorporated in China
, the next step is to register for taxes and social contributions. The VAT is an important tax that needs to be observed and considered at the time the registration for taxation starts. The Certificate of Incorporation and the Articles of Association are among the needed documents for VAT registration in China
. We remind that a company must appoint the legal representative to register for VAT in China
. If all the documents are respected, the VAT Certificate is then issued by the financial authorities in China. Feel free to appoint one of our agents and let us handle the registration for tax purposes in China
. You can also ask for accounting services in China
and skip the formalities of setting up such a department in your firm.
Other tax facts in China
Important tax changes have been implemented in China in the past year, as part of different government policies to boost the economy and to attract even more foreign investors. The reduction of the VAT rate and corporate income tax are two major financial changes for 2019 in China, even if experts in the economy declared their doubts regarding the negative global impact of this measure. The reduced corporate tax of 20% rate observes the small businesses in China
and it is available until December 2020. There is also a consumption tax that ranges from 15 to 56% and it is applicable to luxury goods, high-end cosmetics, tobacco, non-essential products, particular coating products. As for the acquisition tax, this applies to the import of vehicles, trailers, motorcycles, trucks, carts, etc. For more details about the taxes in China
, feel free to address to our team.
Making investments in China
China has a powerful economy and it is considered the second largest FDI recipient in the world after USA. The manufacturing sector, agriculture, and tourism, the financial sector, the IT and telecommunication are among the well-developed areas where most of the foreign investments are directed. The skilled and appreciated workforce, the business-friendly environment and the appealing tax structure are China’s benefits offered to international investors. You might want to take a look at the following numbers and facts that describe the business and economy direction in China:
Around USD 1,627,719 million was the total FDI stock for China in 2018.
In 2018, China ranked 46th out of 190 worldwide economies, as reported by the World Bank.
Between 2018 and 2019, China was one of the top 10 improved economies.
The Cayman Islands, Singapore, South Korea, USA, Japan, the Netherlands, Germany, and Taiwan are among the main investors in China.
Most of the foreign investments are directed to the real estate sector, scientific research, manufacturing, construction, leasing business, and services.
If you need additional information about the VAT in China
and about how can you register a company
in this country, we kindly invite you to contact
our team of company incorporation representatives in China