China New VAT Refund Policy Starting September 2025
Beginning 1 September 2025, China will implement a new VAT refund policy allowing certain taxpayers to apply for refunds of unused retained tax credits, according to Announcement No. 7 and Announcement No. 20 issued by the Ministry of Finance and the State Administration of Taxation.
Under the new rules, eligible general VAT taxpayers can claim refunds of end-of-period retained tax credits starting from the September 2025 VAT filing period. Eligibility and refund conditions vary across different industries:
1. Manufacturing and Related Sectors
Taxpayers engaged in manufacturing, scientific research, software, IT services, and environmental management can apply for monthly refunds of retained VAT credits.
2. Real Estate Development Industry
This sector is subject to more stringent criteria. Taxpayers must:
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Show newly added retained tax credits have remained positive for six consecutive months (or two quarters for quarterly filers), compared to the credit as of 31 March 2019.
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Accumulate at least RMB 500,000 in retained credits by the end of the qualifying period.
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Have more than 50% of VAT sales and advance payments from real estate activities, as defined in China’s industry classification.
Eligible real estate businesses can refund 60% of the increase in retained VAT credits.
3. Other Industries
Taxpayers outside the above sectors may also apply if they:
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Have retained credits greater than zero for six consecutive months.
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Show an increase of at least RMB 500,000 in retained tax credits compared to 31 December of the prior year.
Refund rates are:
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60% on increases up to RMB 100 million.
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30% on amounts exceeding RMB 100 million.
If real estate developers do not meet their sector’s specific conditions, they may apply under these general rules.
