The VAT is one of the most important taxes for companies in China and, when doing business here, companies must register for such tax with the authorities in charge. Our Chinese lawyers can help you register for VAT in China if it applies to your chosen form of business and the services you provide in the country.
Table of Contents
VAT registration in China for residents and non-residents in 2025
The acquisition of the business license is quickly followed by tax registration when establishing a Chinese firm. According to the regulations, taxpayers who are engaged in the production or business operation must submit written applications. These should be submitted for tax registration to the appropriate tax authorities in the localities where the production or business operation is conducted. Or such applications can be submitted where the tax obligation occurs, no later than 30 days after receiving their business licenses. 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 VAT.
It is important to know that non-resident traders with activities in China cannot register for VAT as non-resident traders. This means that a legal representative with residency in China needs to be appointed 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 register for VAT in 2025, do not hesitate to talk to one of our lawyers in China.
VAT for foreign entities operating in China
The VAT system in China is an integral feature of the country’s tax system. The foreign entities operating in the country must fully understand and comply with it. Recent VAT system developments have made it easier and more efficient for businesses to operate. But it is critical to stay up to date on the latest changes and ensure full compliance. Our Chinese lawyers are here to help your foreign entities operating in China to adhere the requirements of the value-added tax. Because, these entities are an important source of revenue for the Chinese government, so, any non-compliance with their regulations may lead you to face penalties in the country.
Please keep in mind, that China has two kinds of taxpayers, general and small-scale. Foreign entities operating in China are usually deemed as general taxpayers, and they are subject to a standard VAT rate of 17%. These entities must calculate, report, and pay VAT on their own and must keep accurate records of taxable transactions to facilitate VAT calculation.
VAT registration procedure in China in 2025
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 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 you that a company must appoint a legal representative to register for VAT in China. If all the documents are submitted, 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.
When you should register for VAT?
It is crucial to know when you can apply for VAT registration in China. Our Chinese lawyers can provide you with detailed information about the applicable threshold for the registration of VAT in China. The annual sales threshold for general VAT taxpayers has been standardized at RMB 5 million. Accordingly, all businesses with yearly sales of RMB 5 million or more will be considered general taxpayers. However, those with sales below that amount would be considered small-scale taxpayers. Businesses and people who import into mainland China or who provide taxable items and related processing services are subject to VAT. In China, there are two different VAT registration categories: for a small business and for a general business. Situations where a Chinese VAT registration is necessary typically include:
- the import of products into China;
- when items are manufactured in China;
- if products are processed or modified in China;
- Chinese installations;
- certain products that China exports.
The VAT system is only applicable in mainland China, meaning that the Special Administrative Regions of Hong Kong and Macau are excluded from this kind of taxation. On the other hand, exports in China are exempt from VAT payment, an advantage that encourages international trading.
You should know that according to the current VAT regulations, non-business activities such as administrative fees and government funds are not taxable. To learn more, you are welcome to get in touch with our lawyers in China. They can offer you practical assistance regarding your VAT registration in China.
Types of 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 that 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 a tax. Besides this, as a foreigner, if you are interested in immigration to China, you can address our lawyers.
Threshold for VAT registration in China
The financial authorities agreed in 2018 to the new threshold for VAT registration in China, which increased from CNY 30,000 to CNY 100,000, helping small companies in the country, for at least 2 years. Also, the reduction of local education taxes on businesses has been recently implemented in China. For complete information about the taxation system in China and the updates for 2025, you should talk to one of our lawyers in China.
Companies registered in China are obligated to respect the VAT regulations. This means that regular VAT returns must be submitted, alongside maintaining the records of the VAT payments. Our Chinese lawyers are aware of the law changes in the tax structure and can assist business owners in remaining compliant.
The applicability of the VAT in China
The VAT in China has a standard value of 13% for the sale and import of goods and also for providing services like processing, repairing, and installation. Services imported in China from abroad are subject to VAT, however, a tax credit can reduce the cost for the buyer. The VAT in China is paid during the various steps of production, for example during the actual production, when the product is sold to the distributor, and when it is resold to a trading company. Our attorneys in China can help you understand the process and manage VAT registration in China.
Companies that perform export activities are entitled to a VAT refund for materials bought in China. Also, small Chinese companies that have a turnover below the legal limit benefit from a reduced VAT rate. Our Chinese lawyers can help you with additional information about these legal benefits and other tax minimization options in China.
China’s VAT – Updates for 2025
Chinese tax authorities have brought up to date the VAT legislation in 2025. As such, a clearer legal framework is intended to bring varied improvements:
- The goods and services subject to VAT are also intangible assets and real estate in China.
- Moreover, the VAT law mentions that companies and individuals selling goods and services, real estate, or intangible assets, seen as taxable transactions, must pay the VAT as stated by the provisions of the respective law.
- Aligning with the VAT international rules, China improves the rules for cross-border transactions by refining the “place-of-consumption” principle. This confirms the tax jurisdiction with the transaction place.
Other taxes in China
China has signed tax treaties with many other countries, which can provide tax relief and eliminate double taxation for foreigners who work in China. These treaties generally establish rules for determining which country has the right to tax certain types of income, and can also provide for reduced tax rates or exemptions in certain circumstances. To learn about active treaties in 2025, get in touch with our lawyers.
Other taxes applicable for registered taxpayers in China are:
- the business tax;
- the consumption tax;
- the urban real estate tax;
- the urban construction;
- maintenance tax;
- the education surcharge.
VAT non-registration consequences in China
In cases when companies or businesses do not register with the VAT in China within 40 days from their first activity on the market, penalties will be imposed by the financial authorities. For instance, a fixed number of fines and the revocation of the business license can be among the penalties for not registering for VAT purposes in China. We remind you that a foreign company in China needs to register for VAT and it must be established as a WFOE (wholly foreign-owned entity) or as a joint venture.
If you want to know more about the taxes for individuals and companies in China, you can get in touch with our Chinese law firm. We can help you with essential information about taxation in China in 2025, and about the legislation when opening a company or getting residency in this country.
How can a taxpayer select VAT categories?
Companies must disclose their taxpayer status as part of the incorporation procedure right away during the company registration process. Many international businesses that are not familiar with the Chinese tax system may find that their major concern is deciding between a VAT small-scale taxpayer and a VAT general taxpayer. The following is a list of the significant variations:
- While small-scale taxpayers cannot, general taxpayers can deduct their input VAT from their output VAT at a given rate;
- Small-scale taxpayers are subject to a lower VAT rate of 3%, while regular taxpayers are charged higher VAT rates of 13%, 9%, and 6%;
- The company must register as a general VAT taxpayer and receive a specific VAT invoice to claim input VAT credits in China;
- Foreign investors must therefore make decisions based on the anticipated business profits while taking into account the needs of clients who might explicitly ask for a particular VAT invoice. Remember that unless the tax authorities grant an exception, regular VAT taxpayers cannot be converted into small-scale VAT taxpayers.
Apart from the services offered for VAT registration in China, our experts can assist in other matters too. For instance, we can handle the procedures of getting a residency in China. Plus, foreigners established here and wanting to get the citizenship in China can collaborate with us. Contact our law firm in China and ask for details about VAT or about immigration to China.