Foreign companies and their China subsidiaries that belong to specific categories are now eligible to apply for a full VAT refund. Here’s everything you need to know about China’s VAT rebate policy and whether or not your organisation is eligible.
Chinese VAT rates vary from 3 to 13 percent for general taxpayers. However, if the input VAT exceeds the output VAT, at the end of each tax period, there will be an available VAT credit. Previously this was non-refundable and would be carried forward to be deducted in the next taxable period.
However, things are not as they were. In April 2019, China announced that certain eligible taxpayers could apply for a refund of their excess input VAT instead of carrying the total amount forward to the next taxable period.
Since this initial update, China has continued to make significant changes to its VAT reform policy. As it currently stands (October 2022), all qualified companies can apply for (incremental) VAT refunds on a month-to-month basis. Additionally, all companies that have carried forward previous VAT credits can now enjoy a once-off full refund of their total VAT credit due. These VAT refunds are geared towards helping enterprises in specific sectors facilitate cash flow and maintain stable macroeconomic performance. From April to May 2022, the VAT credit refunds totalled 1.34 trillion yuan.
However, eligibility criteria will still need to be applied to benefit from the updated VAT rebate policy.
China’s VAT rebate policy now applies to qualified micro and small firms (in all industries) and all qualified enterprises in 13 industries. Below is a list of eligible industries for the VAT rebate policy:
However, eligible enterprises need to keep in mind that there are additional criteria that need to be met in order to qualify for a VAT rebate. The tax authorities will prioritise micro and small enterprises, followed by medium and large enterprises. In addition, sales that fall into any one of the above industries must account for over 50 percent of a company’s total VAT sales for them to qualify for VAT rebates.
Additional requirements include:
Is your business maximising its input recovery and staying 100% compliant? Allow the VAT IT team to take over the reins and mitigate all compliance risks while increasing your VAT yield. Contact our experts and conquer compliance and domestic VAT returns in one fell swoop
How to Deregister for VAT and What to Consider First A drop in turnover, a change of business model, or the closure of a cross-border sales channel can all result in a company being registered for a tax it no longer needs to charge. Cancelling that registration is rarely as simple as writing to the […]
EDI vs E-Invoicing: What’s the Difference and Which Does Your Business Need? Both EDI and e-Invoicing move structured transactional data electronically between businesses. On the surface they look similar. In practice they serve different purposes, operate through different mechanisms, and carry very different compliance implications depending on where your business operates. Understanding the distinction is […]
Backdating VAT Registration: What Businesses Need to Know VAT registration has a deadline. Miss it, and the tax authority does not simply move the start date forward to when you applied. In most cases, it moves it back to when you should have registered in the first place. That gap between when you were liable […]
VAT IT and Helios: Every Invoice Verified, All Eligible VAT Recovered. When your business crosses borders, the tax rules, invoice formats, and compliance requirements change with every country you enter. Most expense platforms were not built to handle that. Managing it across multiple vendors is where things tend to go wrong. Helios and VAT […]
Oman’s e-Invoicing Rollout Just Changed. Here Is the Updated Timeline. On 9 August 2026, Oman’s Tax Authority issued Decision No. 189/2026, adjusting the phased rollout of its mandatory e-Invoicing programme and providing more clarity in respect of the affected taxpayers. The dates have moved. The direction has not. What Changed Phase Who It Covers Previous […]
VAT in the Events Industry: The Triggers That Catch Businesses Out Most event businesses think they have a VAT plan. What they actually have is a VAT filing plan. Those are not the same thing. Filing returns on time does not protect you if the underlying classification of your supplies is wrong. If admission […]
This webinar explains how US businesses can identify and recover foreign VAT, breaking down key concepts like reciprocity and showing where refund opportunities are often missed.
