WHAT 增值税 MEANS
What 增值税 means
The PRC VAT Law took effect on 1 January 2026, placing the core VAT system on a statutory footing. VAT analysis covers taxpayer status, taxable transactions, rates, input-credit mechanics, exemptions, invoicing and import / export treatment.
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Why the role matters
Contract pricing should say whether amounts are VAT-inclusive and which party bears invoice and tax obligations. VAT can also affect cross-border services and permanent-establishment planning.
CONTEXT
Where you see the term
ContextWhat it means there
Sales invoicesOutput VAT and fapiao treatment.
PurchasingInput VAT credit analysis.
Cross-border servicesPlace-of-supply and withholding / filing issues may arise.
TRANSLATION NOTE
文/A
Translation note
增值税 is “value-added tax” or “VAT”. It should not be translated as sales tax because the credit-chain mechanism differs.
AUTHORITY
Primary legal basis
ILLUSTRATIVE EXAMPLE
Example
A consulting contract states a RMB 1 million fee but is silent on VAT. The parties should clarify whether the fee is tax-inclusive and who must issue the compliant invoice.
SOURCES AND REVIEW
Primary authorities.
18 Sep 2026
OFFICIAL SOURCESUPPORTSCHECKED
PRC VAT Law promulgation / official NPC source (effective 1 January 2026)
PRC VAT Law promulgation / official NPC source (effective 1 January 2026)
MAINTAINED BYChina Legal Portal Editorial
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