Main VAT Rules in China – Overview
Here is a clear and structured summary of the key VAT (增值税) regulations in China, useful for foreign companies, WFOEs, importers, and exporters.
1️⃣ Types of VAT Taxpayers: “General Taxpayer” vs. “Small-Scale Taxpayer”
General VAT Taxpayer (一般纳税人)
→ Standard status for medium and large enterprises.
→ Mandatory once annual revenue exceeds the statutory threshold.
Characteristics:
- Can deduct input VAT
- Can issue special VAT fapiao
- Applies standard VAT rates (13%, 9%, 6%)
- Eligible for export VAT refund (退税)
Small-Scale Taxpayer (小规模纳税人)
→ For small or newly created businesses.
Characteristics:
- Flat VAT rate: 3%, with no VAT deduction
- Cannot issue full special VAT invoices (except under special quotas)
- Limited or no access to export VAT refunds
- Simplified bookkeeping
2️⃣ Main VAT Rates in China
| Category | Rate |
| Manufactured goods, products | 13% |
| Transport, construction, logistics | 9% |
| Services, consulting, IT, training | 6% |
| Small-scale taxpayer rate | 3% |
| Export of goods | 0% (exempt) |
| Export of services | 0% or 6%, depending on the category |
3️⃣ Import VAT in China
When importing goods into China, companies pay:
- Customs duties
- Import VAT (13%, 9%, or 6%)
Import VAT is recoverable for General VAT taxpayers,
but not recoverable for Small-Scale taxpayers.
4️⃣ Export VAT: Exemption + Refund (退税)
For Chinese exporters or export-oriented WFOEs:
- Exported goods are VAT exempt
- The company may claim an export VAT refund based on input VAT paid
Important:
The export refund rate is not always equal to the VAT rate.
It depends on government policy (0% / 5% / 9% / 13% etc.) and varies by product category.
⚠️ The refund system is complex and highly regulated:
- strict documentation
- matching of fapiao + customs data + bank receipts
- audit and compliance checks
5️⃣ Fapiao System: The Core of Chinese VAT
VAT in China is fully controlled through fapiao (official tax invoices):
Types:
- Special VAT Fapiao (增值税专用发票) → allows VAT deduction
- General Fapiao (普通发票) → no VAT deduction
All invoices must be issued via the official Golden Tax System (金税系统) under the supervision of the State Tax Administration.
6️⃣ Declaration and Payment
- Monthly VAT filing (quarterly for small-scale taxpayers)
- Fully digitalized process
- Frequent audits and checks
- Must comply with Chinese accounting standards (PRC GAAP)
7️⃣ Important Restrictions & Key Specificities
Key points for foreign companies:
- No VAT deduction without an official fapiao
- Fapiao must be issued using the government-approved system
- Export VAT refunds require strict compliance and registration
- Imported services (e.g., foreign consulting) are subject to reverse charge VAT
Some sectors are VAT-exempt (finance, insurance, etc.)
For any information, please contact our team to info@opkofinance.com.
