Other BriefingsChina Monthly Tax Brief: December 2024
In this China Monthly Tax Brief for December 2024, we highlight significant taxation developments for businesses and individual taxpayers. Among others:
- The state tax authority has announced the 2025 tax filing deadlines.
- The Value-Added Tax Law has been enacted and will take effect on January 1, 2026.
- The State Council has issued the import-export tariff adjustment plan for 2025.
- Several tax agreements between China and partner jurisdictions have come into effect.
- New tax administration rules for restricted stock transfers in listed companies have been introduced.
- Hong Kong has gazetted a tax bill to implement the global minimum top-up tax.
STA clarifies 2025 tax filing deadlines
The State Taxation Administration (STA) has issued a notice clarifying the tax filing deadlines for 2025:
- The filing deadlines for January, July, August, September, and December are the 15th of each month.
- The deadlines for February, April, May, and October are extended due to holidays.
- The deadlines for March, June, and November are extended due to weekends.
The deadlines apply for taxpayers who are required to complete tax filing and payment within 15 business days of the end of each month or quarter. Local tax bureaus can adjust the tax filing and payment deadlines upon special situations. However, such adjustments should be filed with the STA in advance.
| China Tax Filing Deadlines 2025 | ||
| Month | Date | Day |
| January | Jan 15 | Wednesday |
| February | Feb 20 | Thursday |
| March | Mar 17 | Monday |
| April | Apr 18 | Friday |
| May | May 22 | Thursday |
| June | Jun 16 | Monday |
| July | Jul 15 | Tuesday |
| August | Aug 15 | Friday |
| September | Sep 15 | Monday |
| October | Oct 27 | Monday |
| November | Nov 17 | Monday |
| December | Dec 15 | Monday |
To know more about China’s tax filing deadlines and the consequences of missing the deadlines, please read our article here.
The VAT Law officially passed, effective January 1, 2026
The Value-Added Tax Law of the People’s Republic of China (VAT Law) was passed at the 13th meeting of the Standing Committee of the 14th National People’s Congress. This law will take effect on January 1, 2026, at which time the “Interim Regulations on Value-Added Tax of the People’s Republic of China” will be repealed.
The VAT Law enhances and refines existing VAT policies while preserving the current tax system framework and overall tax burden levels.
Key updates include:
- Clarifying the scope of taxable goods, services, and domestic transactions; revising deemed taxable transactions;
- Consolidating non-VAT items;
- Reaffirming VAT as a tax excluded from price; standardizing the simplified tax calculation rate;
- Refining criteria for mixed sales;
- Modifying rules for handling abnormal sales amounts;
- Broadening the scope of input tax refunds; revising non-deductible items;
- Introducing provisions for input tax deductions on loan services;
- Simplifying VAT exemption categories;
- Eliminating legislative authorization clauses;
- Adjusting the tax period;
- Incorporating electronic invoice regulations; and
- Establishing a tax coordination mechanism.
While these changes represent significant improvements, the implementation of certain provisions will depend on further clarifications in subsequent regulatory documents.
| Key Highlights of the VAT Law | |
|---|---|
| Items | Details |
| Scope of taxpayers | Entities and individuals engaged in the sale of goods, services, intangible assets, real estate, and imported goods within China are designated as VAT taxpayers. |
| Taxable transactions | The law defines taxable transactions and specific scenarios, including deemed taxable transactions and non-taxable items. |
| Deemed taxable transactions | Entities and individual businesses using self-produced or commissioned goods for collective welfare or personal consumption. Entities and individual businesses transferring goods free of charge. Entities and individuals transferring intangible assets, real estate, or financial products free of charge. Providing services free of charge to other entities or individuals, consignment sales of goods, and using self-produced or commissioned goods for investment or shareholder distribution are no longer considered deemed taxable transactions. |
| Tax rates and collection rates | The law maintains the current VAT rate structure, set at 13%, 9%, and 6%. A zero-tax rate policy is applied to specific export goods and services. The simplified tax calculation method has an applicable collection rate of 3%. The VAT law does not specify a 5% tax rate. Whether this rate will be canceled or continued in the implementation regulations and other supporting documents will be clarified in subsequent releases. |
| Calculation of tax payable | The general tax calculation method involves deducting input tax from output tax, while the simplified method multiplies the sales amount by the collection rate. The calculation rules for VAT on imported goods are also specified. Input tax deduction is a core feature of the VAT system. |
| Tax incentives | The law provides exemptions or preferential policies for small-scale taxpayers, specific agricultural products, medical services, educational services, etc., to support the development of specific industries and social undertakings. The State Council is authorized to formulate specific exemption standards and special preferential policies, which must be submitted to the Standing Committee of the National People’s Congress for record-keeping to ensure compliance and supervision. |
| Tax collection and management | The law stipulates the time of tax liability, place of tax payment, tax period, tax filing deadlines, and the responsibilities of withholding agents. |
| Legal liability | Violations of the VAT law will be pursued in accordance with relevant laws. |
For more information about China’s tax legislation, please read our China Briefing article here.
The State Council announced the 2025 Import-Export Tariff Adjustment Plan
On December 26, 2024, the Tariff Commission of the State Council released the 2025 Tariff Adjustment Plan, which took effect on January 1, 2025.
Additionally, the Tariff Commission has issued the Import and Export Tariff Schedule of the People’s Republic of China (2025),” which took effect on January 1, 2025 as well. Together, the tariff adjustment and the schedule update aim to adjust and optimize the tariff rate structure for import and export goods to adapt to changes in domestic and international economic conditions, as well as the needs of international trade.
| Key Points of China’s Tariff Adjustment Plan 2025 | |
|---|---|
| Items | Details |
| Most-Favored-Nation (MFN) tariff adjustments | In line with commitments to the World Trade Organization, China has increased the MFN tariff rates on certain imported syrups and sugar-containing premixes. Additionally, MFN tariff rates will apply to imports originating from the Union of the Comoros to promote fair trade and mutually beneficial cooperation. |
| Provisional tariff rates | Provisional import tariff rates will be applied to 935 items (excluding tariff quota items) to flexibly respond to changes in domestic and international markets. Furthermore, export tariffs will continue to be levied on 107 items, including ferrochrome, with provisional export tariff rates applied to 68 of these items to protect domestic industries and safeguard national interests. |
| Encouraging imports and domestic industry development | Implementing provisional import tariff rates lower than the MFN rates encourages imports and promotes domestic industry development. For example, the provisional import tariff rate for infant formula is lower than the MFN rate. To support technological innovation and public welfare, import tariffs on certain high-tech products and medical supplies have been reduced. Additionally, tariff reductions have been applied to environmental products such as ethane to promote green and low-carbon development. |
| Tariff quota rates | Tariff quota management will continue for eight categories of imported goods, including wheat, with rates remaining unchanged. A provisional tariff rate of 1% will continue to apply to quota rates for three types of fertilizers: urea, compound fertilizers, and ammonium phosphate. Additionally, a sliding-scale provisional tariff rate will be applied to a certain quantity of cotton imported outside the quota. |
| Tariff item adjustments | Adjustments have been made to certain tariff items and national subheadings, with new subheadings added for dried seaweed, carbon additives, and injection molding machines. Descriptions for national subheadings of items such as baijiu, wood-based activated carbon, and thermal printheads have been optimized. The total number of tariff items for 2025 has reached 8,960, further optimizing the tariff structure to facilitate trade operations and management. |
| Implementation of agreement tariff rates | Based on free trade agreements and preferential trade arrangements signed and effective between China and relevant countries or regions, agreement tariff rates will be applied to certain imports originating from 33 countries or regions under 23 agreements. |
| Continuation of preferential tariff rates | China will continue to grant zero-tariff treatment to 100% of tariff items from 43 least developed countries with which it has diplomatic relations, supporting their development and mutual benefit. Additionally, under the Asia-Pacific Trade Agreement and intergovernmental exchange agreements with certain ASEAN member countries, preferential tariff rates will be applied to certain imports originating from Bangladesh, Laos, Cambodia, and Myanmar. |
For more details about China’s 2025 Tariff Adjustment Plan, please read our China Briefing article here.
China’s tax agreements with multiple countries take effect, strengthening international tax cooperation and preventing base erosion
The STA announced in its 2024 Announcement No. 13 that the following tax agreements have officially taken effect, based on the progress of treaty negotiations with relevant countries:
- The Agreement between the People’s Republic of China and the Argentine Republic for the Elimination of Double Taxation with Respect to Taxes on Income and on Property and the Prevention of Tax Evasion (referred to as the “China-Argentina Agreement”) took effect on November 26, 2024. It will apply to taxes withheld at source on payments made on or after January 1, 2025, and to income or property taxes for tax years beginning on or after this date.
- The Agreement between the Government of the People’s Republic of China and the Government of the Gabonese Republic for the Avoidance of Double Taxation and the Prevention of Tax Evasion with Respect to Taxes on Income (referred to as the “China-Gabon Agreement”) took effect on October 13, 2024, and applies to income earned in tax years beginning on or after January 1, 2025.
- The Protocol Amending the Agreement between the Government of the People’s Republic of China and the Government of the Republic of Austria for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Property and the Protocol (referred to as the “China-Austria Protocol”) took effect on November 19, 2024, and applies to income earned in tax years beginning on or after January 1, 2025.
Additionally, the “Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting” (referred to as the “Convention”) now applies to bilateral tax treaties between China and countries such as Mongolia, Papua New Guinea, Vietnam, Armenia, Tunisia, and Azerbaijan. The specific application dates will be determined in accordance with Article 35 of the Convention. These measures aim to ensure smooth international tax cooperation and effectively prevent base erosion and profit shifting.
| Tax agreement | Effective date | Applicable period |
|---|---|---|
| China-Argentina Agreement | November 26, 2024 | Applies to taxes withheld at source on payments made on or after January 1, 2025, and to income or property taxes for tax years beginning on or after this date. |
| China-Gabon Agreement | October 13, 2024 | Applies to taxes withheld at source on payments made on or after January 1, 2025, and to income or property taxes for tax years beginning on or after this date. |
| China-Austria Protocol | November 19, 2024 | Applies to taxes withheld at source on payments made on or after January 1, 2025, and to income or property taxes for tax years beginning on or after this date. |
| Multilateral Convention | Varies by country | Applies to bilateral tax treaties between China and Mongolia, Papua New Guinea, Vietnam, Armenia, Tunisia, and Azerbaijan. Specific application dates will be determined in accordance with Article 35 of the Convention. |
The STA, MOF, and CSRC updated tax administration for restricted stock transfers
The STA, Ministry of Finance (MOF), and China Securities Regulatory Commission (CSRC) jointly issued the Announcement on Further Improving Tax Administration Services for Individual Income from Restricted Stock Transfers in Listed Companies, which was effective immediately.
Key points of the Announcement include:
- Tax filing location: The tax filing location for personal income from restricted stock transfers has been shifted from the securities institution’s location to the listed company’s location.
- Withholding agent: Securities institutions remain responsible for withholding and remitting individual income tax.
- Policy scope: The rules apply to various scenarios, including restricted shares from equity reform, IPOs, transferred unlisted shares, inherited or divided restricted shares, shares transitioned from over-the-counter systems to main markets, shares from mergers or splits, and original shares from the New Third Board and Beijing Stock Exchange.
- Streamlined services:
Tax authorities now offer “national unified processing,” simplifying processes like withholding registration, tax declaration, and payments for securities institutions, as well as self-declaration and clearance for taxpayers. - Convenient filing: Securities institutions can handle tax declarations remotely through the individual e-tax bureau or file in person at the securities institution’s local tax authority. Taxes are settled at the listed company’s local tax authority.
- Self-declaration requirements: Taxpayers must self-declare and reconcile taxes if discrepancies arise between prepaid taxes and the actual taxable amount. This can be done via the individual e-tax bureau or the listed company’s local tax office.
- Enhanced tax authority coordination: Local tax authorities at the listed company’s location are primarily responsible for managing tax collection, with support from tax authorities at the securities institution’s location. Tax services will continue to be optimized for greater efficiency.
Hong Kong global minimum top-up tax legislation gazetted
Hong Kong’s Taxation (Amendment) (Minimum Tax for Multinational Enterprise Groups) Bill 2024 was gazetted on December 27, 2024. The bill aims to implement the OECD’s BEPS 2.0 international tax reform framework, by establishing a global minimum tax and a Hong Kong-specific top-up tax starting in 2025. More than 140 jurisdictions have embraced this framework to mitigate the risks of base erosion and profit shifting in the digital economy.
| Key Points of Hong Kong’s Global Minimum Tax Bill | |
|---|---|
| Key highlights | Details |
| Implementation in Hong Kong | Starting in 2025, Hong Kong will implement the global minimum tax and top-up tax under the BEPS 2.0 framework to support business development and fulfill international obligations. |
| Pillar two of BEPS 2.0 | A 15% global minimum tax will be applied to multinational enterprise groups with consolidated revenues of at least €750 million in at least two of the past four fiscal years. |
| GloBE rules | Income inclusion rule: If a member entity of a multinational enterprise group in a jurisdiction has an effective tax rate below the global minimum, the jurisdiction will levy a top-up tax on the low-taxed income. Undertaxed payments rule: If a multinational company’s effective tax rate in a jurisdiction is below a specific threshold, the jurisdiction of the member entity can levy a top-up tax on the low-taxed income. |
| Hong Kong’s implementation framework | The OECD’s GloBE Model Rules will be incorporated into Hong Kong’s Inland Revenue Ordinance with necessary modifications. Covered multinational enterprise groups will need to determine the location and income of member entities and calculate the effective tax rate. |
| Hong Kong top-up tax mechanism | The Hong Kong top-up tax will align with the GloBE rules. It will take precedence over the income inclusion rule and undertaxed payments rule, taxing low-taxed member entities operating in or located in Hong Kong. Investment entities and insurance investment entities are excluded from the Hong Kong top-up tax. Hong Kong will provide transitional country-by-country reporting safe harbors, transitional undertaxed profits rule safe harbors, qualified domestic minimum top-up tax safe harbors, and simplified calculation safe harbors for non-significant member entities to reduce compliance burdens. The Hong Kong top-up tax will be levied starting from fiscal years beginning on or after January 1, 2025. |
| Tax compliance and administration | Covered multinational enterprise groups’ Hong Kong member entities must submit top-up tax returns and notifications. Top-up tax assessments and payment notices will be issued based on the submitted information. Penalties will be imposed for non-compliance with reporting requirements and administrative regulations. The tax administration framework also applies to other entities operating in Hong Kong, including joint ventures, joint venture subsidiaries, and stateless member entities. |
Other updates in December
Expansion of China’s private pension system
The Ministry of Human Resources and Social Security, MOF, STA, Financial Regulatory Administration, and CSRC jointly issued a notice to fully implement the private pension system nationwide, effective December 15, 2024.
Key highlights include:
- Eligibility: Urban employees and urban-rural residents covered by basic pension insurance can now participate.
- Expanded pension products: Inclusion of government bonds and other financial instruments in the portfolio.
- Enhanced withdrawal flexibility: Broader scenarios for early withdrawal and improved withdrawal methods.
- Optimized management services: Streamlined processes to enhance service levels and business conditions for personal pensions.
- Tax deduction cap: Individuals can deduct contributions to personal pension accounts from their comprehensive or business income, with an annual cap of RMB 12,000.
- Enhanced supervision: Strengthened oversight and inter-departmental coordination to ensure smooth implementation and long-term sustainability.
Macao’s New Tax Code
The Macao Legislative Assembly passed the Tax Code Approval Bill on December 16, 2024, marking a comprehensive overhaul of the territory’s tax framework.
Key provisions include:
- Modernized tax laws: Introduction of international standard tax rules, including clarifications on territoriality and compensatory interest payments for taxpayers.
- Implementation timeline: The new code will take effect in phases, with initial changes (e.g., property transfer stamp duty modifications) effective December 31, 2024, and tax residency definitions effective January 1, 2025. Full implementation is scheduled for January 1, 2026.
- Transfer pricing: Inclusion of Articles 43-A to 43-I in the “Profits Tax Regulations,” introducing transfer pricing rules.
- Taxpayer domicile requirements: Taxpayers must notify or amend their tax domicile with the Financial Services Bureau within one year from January 1, 2026.
Shanghai’s property tax relief for hardship cases
On December 20, 2024, the Shanghai Municipal Finance Bureau and Shanghai Municipal Tax Service issued an announcement introducing property tax hardship relief for businesses effective January 1, 2024. The announcement outlines ineligible scenarios, required documentation, and penalties for non-compliance.
Key scenarios for eligibility include:
- Companies in bankruptcy proceedings.
- Entities suffering significant disaster-related losses.
- Public service enterprises incurring losses under government pricing.
- Non-profit organizations and innovative platforms operating at a loss.
- Other cases specified by higher authorities.
Guangdong and Shenzhen adjust land value-added tax rates
The Guangdong Provincial Tax Service and Shenzhen Municipal Tax Service revised pre-collection rates for land value-added tax, effective January 1, 2025.
Key rates include:
- General real estate development projects: 1.5%.
- Specific value-added scenarios: 3.5%, 5%, and 8%, based on conditions.
- Affordable housing projects: Exempt from LVAT (0%).
The announcement supersedes previous regulations, reflecting a commitment to align taxation policies with regional economic objectives.
About Us
China Briefing is one of five regional Asia Briefing publications, supported by Dezan Shira & Associates. For a complimentary subscription to China Briefing’s content products, please click here.
Dezan Shira & Associates assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Haikou, Zhongshan, Shenzhen, and Hong Kong. We also have offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Dubai (UAE) and partner firms assisting foreign investors in The Philippines, Malaysia, Thailand, Bangladesh, and Australia. For assistance in China, please contact the firm at china@dezshira.com or visit our website at www.dezshira.com.
- Previous Article China Tax Filing and Payment Deadlines for 2025
- Next Article
