Tax in China: VAT, income tax, company tax, capital gains
13%
China charges 13% VAT (增值税) on most goods and services. The rate is verified against State Taxation Administration (STA) of China on 19 August 2026; the top personal income-tax rate is 45% (2026 tax year, State Taxation Administration (chinatax.gov.cn)), and the headline company tax rate is 25% (OECD Corporate Tax Statistics).
VAT (增值税) in China
Value-added: VAT (增值税) is charged on sales and reclaimed on purchases, so only the added value is taxed.
- Standard rate
- 13%
- Local name
- VAT (增值税) — Value Added Tax
- Type
- VAT
- Reduced rates
- 9%
- Filing
- Monthly / Quarterly
- Authority
- State Taxation Administration (STA) of China
- Current rate since
- 1 April 2019
Introduced 1994 (modern VAT); the parallel Business Tax survived until 1 May 2016
China's modern VAT dates from the 1994 tax-sharing reform, but for two decades it covered goods while services sat under a separate, cascading Business Tax. Closing that split — the reform known as "B2V" — started as a Shanghai-only pilot in 2012, went nationwide in 2013, and finished on 1 May 2016, when construction, finance, lifestyle services and real estate all switched across and the Business Tax disappeared from the tax system altogether.
What it replaced: The Business Tax (营业税), a separate cascading turnover tax on services, construction, finance and real estate that gave no credit for tax already paid upstream.
Income tax in China
The top personal income-tax band is 45% for the 2026 tax year.
Company tax in China
The headline corporate income tax rate is 25%. In effect since 1 January 2026.
Indicative only: confirm with China's national tax authority. OECD 2026: central statutory CIT 25%, combined (central+sub-central) 25%
Capital gains tax in China
- Shares
- unconfirmed - lead: individuals' gains on transfer of listed A-shares are temporarily exempt from IIT (Caishuizi [1998] No. 61 line of circulars); other share transfers fall under 'income from transfer of property' at 20% flat
- Property
- unconfirmed from official source - lead: 20% of (proceeds - original cost - reasonable expenses); where cost cannot be substantiated, local tax bureaus apply a deemed 1%-3% of sale price
- Holding period
- unconfirmed (no holding-period distinction expected; restricted-share rules differ)
Did you know? China tax facts
Merging China's two parallel consumption taxes took four years and ended on a single day: on 1 May 2016 construction, finance, lifestyle services and real estate switched to VAT together, and the old Business Tax ceased to exist.
The changeover began as a Shanghai pilot in 2012 and went nationwide in 2013. It was billed as China's most significant tax reform in over two decades, and the expansion of VAT was expected to cut tax payments by RMB 500 billion (about US$77 billion) in 2016 alone.
Source: China Briefing — An Overview of China's VAT Reform ↗China turned its tax receipts into scratch-and-win tickets: the official 'fapiao' carries metallic patches you scratch off for prizes from 5 to 50,000 yuan, so shoppers have a reason to demand the receipt that puts the sale on the books.
The scheme started in Haikou in 1998 and reached 80 major cities by 2002. That year the prizes paid out came to about 30 million yuan while the receipts brought in roughly 900 million yuan of tax — about thirty yuan collected for every yuan given away.
Source: The Christian Science Monitor — How China got businesses to pay taxes: scratch-n-win tickets ↗China's individual income tax law dates only from 1 September 1980; today it runs in seven brackets from 3% to 45%, and a foreigner becomes taxable on worldwide income after more than 183 days in the country in a year.
Wikipedia: 'China's individual income tax system was thus established' after the law was adopted on 1 September 1980; the tax is progressive 'from 3 percent to 45 percent'; non-domiciled individuals are 'taxed on worldwide income should they be present in mainland China for more than 183 days', otherwise only on China-sourced income.
Source: Wikipedia — Income tax in China · checked 10 October 2026 ↗China's 2018 reform lifted the monthly tax-free threshold to ¥5,000 from 1 October 2018 and, from 1 January 2019, added deductions for children's schooling, big medical bills, mortgage interest or rent, and elderly care.
Wikipedia: the reform passed in August 2018 set the threshold at '60,000 yuan per year, or 5,000 yuan per month', effective 1 October 2018; from 1 January 2019 'the taxpayer may claim deductions for the education of dependent children', continuing education, major medical expenses, mortgage interest or rent, and elderly parent care.
Source: Wikipedia — Income tax in China · checked 10 October 2026 ↗
More stories, for every country that has one, on the tax facts page.
Ask your AI assistant about tax in China
The figures on this page are callable by any MCP-compatible assistant through the free Tax MCP. Add https://taxmcp.ai2fin.com as a custom connector in Claude, ChatGPT, Cursor or your own agent — no login, no API key — then ask:
- “What is the VAT (增值税) rate in China, and what is the source?”
- “Estimate income tax in China on CNY 60,000 for 2026.”
- “What is the company tax rate in China and how is it sourced?”
Connect in three steps, and what a connected answer looks like: Tax MCP.
China, answered
Questions about tax in China
- What is the VAT (增值税) rate in China?
- The standard VAT (增值税) (Value Added Tax) rate in China is 13%, verified against State Taxation Administration (STA) of China on 19 August 2026. A reduced rate of 9% applies to some categories. Value-added: VAT (增值税) is charged on sales and reclaimed on purchases, so only the added value is taxed.
- What is the top income tax rate in China?
- The top personal income-tax band in China is 45% for the 2026 tax year, verified against State Taxation Administration (chinatax.gov.cn) on 6 October 2026. The free income-tax calculator on this site works through the bands below it, and shows the rate table it used.
- What is the company tax rate in China?
- The headline corporate income tax rate in China is 25%, as published by OECD Corporate Tax Statistics (checked 6 October 2026, verification pending). Indicative only: confirm with China's national tax authority. OECD 2026: central statutory CIT 25%, combined (central+sub-central) 25%
- How is capital gains tax charged in China?
- In China, the regime is mixed, as published by PwC Worldwide Tax Summaries (lead only) (checked 6 October 2026, verification pending). On shares: unconfirmed - lead: individuals' gains on transfer of listed A-shares are temporarily exempt from IIT (Caishuizi [1998] No. 61 line of circulars); other share transfers fall under 'income from transfer of property' at 20% flat Holding period: unconfirmed (no holding-period distinction expected; restricted-share rules differ)
- Can an AI assistant look up tax rates for China?
- Yes. The free Tax MCP at https://taxmcp.ai2fin.com gives Claude, ChatGPT, Cursor or any MCP-compatible agent the same sourced figures as this page: the VAT (增值税) rate, an income-tax estimate, the company tax rate, the capital gains rule and a side-by-side comparison with other countries, each answer citing the authority and the date it was checked. Add the endpoint as a custom connector; there is no login or API key.
Sources
- State Taxation Administration (STA) of China
- State Taxation Administration (chinatax.gov.cn)
- OECD Corporate Tax Statistics
- PwC Worldwide Tax Summaries (lead only)
- China Briefing — An Overview of China's VAT Reform
- The Christian Science Monitor — How China got businesses to pay taxes: scratch-n-win tickets
- Wikipedia — Income tax in China
Last checked 10 October 2026. General information computed from published government rates, not tax advice. Check the linked authority or a registered adviser before relying on a figure.
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