律页科技 | 专业法律科技解决方案

来源：金杜研究

发布日期：2026年02月14日

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Looking back at 2025, China's tax landscape evolved significantly amid a deepening digital economy, accelerating global tax transparency, and the rapid growth in new economic models.

Drawing from professional practice, we highlight ten key tax developments that defined a dynamic 2025 and set the stage for the year ahead.

Implementation of the VAT Law Released

To facilitate the implementation of the Value-Added Tax (VAT) Law, the State Council officially issued the Implementation of the VAT Law (Implementation Rules) on 25 December 2025. The Implementation Rules entered into force on 1 January 2026, together with the VAT Law.

Key highlights of the Implementation Rules include: (i) a more detailed definition of "consumption within China", which clarifies that certain "on-site consumption outside China" scenarios are excluded, while retaining a direct-connection element to goods, immovable property and natural resources within China; (ii) a restatement of the tax treatment previously associated with "mixed sales" under the prior VAT rules; (iii) adjustments to the scope of certain tax incentives; and (iv) an anti-avoidance provision under which the tax authorities may make reasonable adjustments where a taxpayer adopts arrangements lacking reasonable commercial purpose to reduce VAT payable.

As VAT remains China's largest tax by revenue, the VAT Law and the Implementation Rules are expected to have a material impact on VAT compliance and administration. Further guidance may follow, and taxpayers are advised to monitor the developments.

CRS Enforcement Intensifies Scrutiny on High-Net-Worth Individuals

In 2025, a significant number of high-net-worth individuals reportedly received notices from the tax authorities requiring individual income tax filings and payments in respect of offshore investment returns. Tax authorities in regions such as Beijing, Guangdong, and Fujian issued filing notices and publicized enforcement cases related to undeclared offshore income, signaling tighter scrutiny of high-net-worth individuals' foreign investments.

This enhanced scrutiny is closely linked to the implementation of the Common Reporting Standard (CRS) for the automatic exchange of financial account information. Since 2018, China has participated in the CRS framework, enabling systematic oversight of its tax residents' offshore income through international information exchange.

Ongoing updates to CRS rules are closing cross-border tax loopholes, advancing global tax transparency and significantly reducing shelter options in traditional tax havens. This shift is prompting high-net-worth individuals to reconsider and establish more compliant, sustainable offshore holding structures.

New Tax Reporting Rules for Online Platforms Signal End of Unregulated Growth

In June 2025, the State Council issued the Regulations on Internet Platform Enterprises' Submission of Tax-related Information, with the State Taxation Administration releasing supporting guidelines to clarify reporting procedures and penalties.

Under the new rules, platform enterprises - as the primary reporting entities - must regularly submit tax-related information on operators (e.g., sellers and service providers) using their platforms. Non-compliance, such as incomplete reporting or failure to cooperate, will result in legal penalties.

This shift turns platforms from passive information holders into active tax reporters, marking a step toward deeper digital integration in tax governance. Moving forward, the regulations will interface with existing laws such as the Tax Collection Administration Law and the E-Commerce Law, providing a stronger institutional framework for tax oversight in the platform economy and enhancing information transparency.

Hainan Free Trade Port Island-wide Customs Operation Launches, Enhancing Tax Benefits

On 18 December 2025, the Hainan Free Trade Port (Hainan FTP) launched full-island independent customs operations. This milestone aims to strengthen the FTP policy framework and improve the implementation of key tax and customs incentives.

For businesses, the policy offering a 30% customs duty exemption for value-added processing has now relaxed eligibility thresholds and widened the range of applicable imported materials. Other preferential policies remain in effect, including a reduced 15% corporate income tax rate for encouraged industries and tax exemptions on income derived from eligible new foreign direct investment.

For individuals, updated official documents have refined preferential income tax policies, clarifying eligibility criteria and calculation methods for tax reductions and exemptions, which helps make local recruitment more attractive and practical.

Furthermore, the "zero-tariff" product list has been substantially expanded—from 1,900 tariff lines to around 6,600 lines.

Collectively, these measures support enterprises in lowering costs, improving operational efficiency, expanding their presence, and attracting and retaining talent.

The Supreme People's Court Further Clarifies the Boundary Between "Falsely Issuing Special VAT Invoices" and "Tax Evasion"

In November 2025, China's Supreme People's Court released a set of typical cases concerning crimes against tax administration.

Case 1, involving offenses of falsely issuing special VAT invoices and tax evasion, drew significant public and professional attention. The ruling emphasized that the key distinction lies in the taxpayer's intent: whether it is to defraud tax revenue or to evade tax obligations. If a taxpayer, within their due tax liability, uses false input credits to reduce payments—even if the method involves fraudulent invoicing—the core purpose remains tax evasion. Following the principle of unity of subjective and objective elements, such acts should be treated as tax evasion.

This interpretation clarifies a long-disputed legal boundary and helps standardize judicial rulings.

In December 2025, the Court's General Office further elaborated in its official reply (Court Office Letter [2025] No. 1595), reaffirming that the characterization of false input tax deduction in VAT fraud cases must align with the principles of subjective-objective unity and proportionality of crime, liability, and punishment.

A More Systematic Framework for Resolving Tax Disputes in Bankruptcy Cases, with Draft Amendments to the Enterprise Bankruptcy Law

In recent years, issues relating to the recognition, repayment and dispute resolution of tax claims have become increasingly prominent in bankruptcy and restructuring cases. A more systematic framework is emerging through both judicial practice and legislative drafting.

The Draft Amendments to the Enterprise Bankruptcy Law (released for public consultation) include dedicated provisions addressing the treatment of tax claims, the coordination between bankruptcy administrators and tax authorities, and the handling of tax disputes within bankruptcy proceedings. If finalized, these changes may provide clearer procedural pathways in practice.

Tax Credit for Foreign Investors' Direct Reinvestment of Distributed Profits Introduced

In June 2025, the Ministry of Finance, the State Taxation Administration, and the Ministry of Commerce jointly issued an Announcement on the Tax Credit Policy for Foreign Investors' Direct Investment Using Distributed Profits. According to the announcement, foreign investors who reinvest profits distributed by Chinese resident enterprises into qualified domestic direct investments between 1 January 2025 and 31 December 2028, may claim a tax credit of up to 10% of the investment amount against their current year's tax payable.

Notably, eligible foreign investors may combine this new tax credit policy with the existing "deferred taxation" policy—which allows temporary non-withholding of withholding tax on reinvested profits—achieving dual optimization in both tax burden and cash flow.

New Measures for Publicizing Tax Arrears Issued: Strengthening Supervision and Credit Linkage Mechanism

In November 2025, the State Taxation Administration released the Tax Arrears Announcement Measures, which will take effect on 1 March 2026. These measures detail the specific procedures, content, announcement channels, and frequency for tax arrears announcements.

Compared with the prior measures (issued in 2004 and amended in 2018), the disclosure scope has been expanded and the thresholds and information items have been adjusted. The updated measures may increase reputational and commercial impacts associated with tax arrears, and may also interact with other regulatory systems, including credit management regimes.

Flexible Employment Platforms Continue to Face Compliance Scrutiny, with Greater Attention on Withholding and Reporting Obligations

As an emerging business model supporting labor market participation, flexible employment platforms have grown rapidly in recent years. In parallel, compliance challenges have also become more visible, including issues relating to the characterization of income, withholding obligations and the authenticity of underlying transactions.

In practice, we have observed that certain regions (including Fujian and Gansu) have begun to take a closer look at flexible employment platforms and related service arrangements, including through targeted inspections and enforcement actions. The risk assessment is typically fact-driven and may vary by business model and contractual structure.

Updated 2025 OECD Model Tax Convention Released, Featuring Clarified Framework for Key Provisions

On 19 November 2025, the OECD released the 2025 Update to the OECD Model Tax Convention. The update covers a range of topics, including the permanent establishment (PE) implications of cross-border remote working arrangements, taxation of income derived from activities related to the extraction of natural resources, and certain rules around the deductibility of interest on related-party financing.

While the majority of the amendments are reflected in the Commentary, the guidance is relatively detailed. Depending on domestic practice, some tax authorities may refer to the updated Commentary as an interpretative aid when applying tax treaty provisions. Chinese enterprises, particularly those with outbound operations, may wish to monitor these developments and assess potential risks on a jurisdiction-by-jurisdiction basis.

Tax Outlook for 2026

Looking ahead to 2026, the implementation of the VAT Law and the Implementation Rules is likely to reveal practical challenges, prompting further guidance from the tax authorities. Meanwhile, ongoing digitalization of tax administration and expanded data sharing will facilitate more targeted enforcement against non-compliance.

We anticipate continued scrutiny of individuals' offshore income through CRS. As China advances its unified national market agenda and cracks down on shell companies and invoice-driven fraud, tax authorities will play an increasingly prominent role. Compliant businesses should monitor potential spillover effects on invoicing, supplier vetting, and transaction documentation.

Tax policy is expected to remain aligned with strategic priorities such as innovation and green development. At the same time, enhanced enforcement tools and a broader compliance scope may lead to more frequent tax disputes. The use of administrative review and litigation as formal resolution channels is gradually growing.

In this environment, maintaining strong tax governance, proactive issue identification, and thorough documentation will be essential to managing tax risks in 2026.

Authors

Dong Gang (Tony) | Partner

tony.dong@cn.kwm.com