BEIJING (Reuters) – China approved a value-added tax law on Wednesday that will take effect on Jan. 1, 2026, official Xinhua said, bringing to a document previous regulations that included exemptions. of things from taxes.

VAT, China’s largest tax category, will account for nearly 38% of national tax revenue in 2023, official data show.

The report did not elaborate on the provisions of the law. The latest draft includes exemptions for some agricultural products, imported instruments and equipment for scientific research and teaching, some imported goods for the disabled and services provided by welfare. institutions such as nurseries, kindergartens and nursing institutions for the elderly.

To help certain sectors or businesses, the government may include new items in the scope of tax deductions.

“With the introduction of the VAT Law, 14 tax categories out of 18 in China have their own laws, which account for the majority of tax revenue and mark significant progress in implementing the principle of statutory taxation, ” said Xinhua.

The law was passed at the end of a session of China’s highest legislature, the National People’s Congress Standing Committee, which began on Saturday.

Last month, China unveiled tax incentives on housing and land transactions to support the crisis-hit property market. Residents are exempt from VAT if they sell their homes at least two years after purchase.

In September 2023, the finance ministry said it would extend a VAT refund policy aimed at encouraging domestic and foreign research institutions to purchase Chinese-made equipment until the end of 2027.

China in 2019 cut the VAT rate for manufacturers to 13% from 16%, and to 9% from 10% for the transport and construction sectors.

With the world’s second-largest economy slowing, VAT revenue in the first 11 months of this year fell 4.7% from the same period last year to 6.1 trillion yuan ($840 billion), as the businesses suffer from weak domestic demand. For November, VAT revenue increased by 1.36%.

“The rebound in VAT reflects the improvement of economic vitality, as sales and business activity recover. It may also indicate a recovery in industrial profits, further supporting economic momentum,” Tommy Xie , head of Asia macro research at OCBC, said in a note on Monday.

($1 = 7.2986 renminbi)