In a significant policy move, China has approved its first unified Value-Added Tax (VAT) law, set to take effect from January 2026. The law aims to streamline the country’s complex tax system, introducing a single, uniform VAT framework that will replace the existing array of VAT regulations.
The new law is expected to simplify the tax process for businesses across various sectors, including textiles, manufacturing, and services, by reducing administrative burdens and enhancing tax compliance.
Under the unified system, businesses will benefit from clearer tax structures and more consistent application across regions.
China’s textile industry, one of the world’s largest and most important, is set to gain from this change, as the new VAT law will create a more predictable environment for both domestic and foreign businesses. The move is also seen as a step towards improving transparency and aligning China’s tax system with international best practices, enhancing its appeal as a global trading partner.
The government has emphasized that the new law will contribute to the country’s broader economic goals by promoting fair competition, supporting the transition to a more market-driven economy, and encouraging innovation and investment across industries.
The VAT overhaul, while a long-term transition, is viewed as a critical reform that will shape the future of China’s business landscape, offering improved operational efficiency and greater clarity for businesses operating in the country.
