China VAT Explained for Foreign Companies

Who registers, and as what

Every Chinese company registers for VAT. New companies usually start as small-scale taxpayers; once annual sales pass the threshold (or by election) you become a general taxpayer. The status determines your rates, invoicing and input-VAT credits.

Rates at a glance

• 13% — most goods
• 9% — transport, construction, real estate and certain goods
• 6% — services, intangibles and financial services
• Small-scale taxpayers — a lower levy rate, with periodic preferential reductions

Filing and invoices

VAT returns are filed monthly (general taxpayers) or quarterly (small-scale). Official invoices (fapiao) support both your sales and your input credits; general taxpayers can deduct input VAT, small-scale taxpayers cannot. Nil returns are mandatory in months with no activity.

Common mistakes

• Missing filing deadlines, even with zero activity
• Mixing personal and company accounts
• Choosing the wrong taxpayer status for your margin structure
• Accepting unsupported invoices as deductions