China VAT on foreign digital services

Mainland China places the Value Added Tax responsibilities for non-resident sourced digital or electronic onto the Chinese resident customer. This applies to both B2C and B2B. There is no facility for non-residents to register for VAT. Non-resident providers of digital services should consider the likelihood that their customer will impose Withholding VAT on the payment, and may wish to charge a VAT inclusive price even though they are not VAT registered.

The current VAT rate in China is 13%. However, there is extensive use of the reduced rates: 9%; 6%; 3%. Follow VAT Calc’s global VAT and GST on digital services tracker for live updates on worldwide reforms.

VAT on foreign goods is therefore collected as import VAT – rather than it being assessed by the provider at the point-of-sale. Chinese recipients for such services must self-assess the VAT due via declarations to the XXXX. In reality, this does not happen often.

Chinese Withholding VAT

Chinese marketplaces and intermediaries will typically act as a VAT withholding agent. There is no reverse charge / zero-rating operation on foreign digital services to businesses or consumers.

China does impose a range of Withholding VAT requirements on resident purchasers for foreign supplies. Non-residents should therefore be wary of losing part of their revenues as irrecoverable tax since they cannot VAT register in China.

VAT Calc’s in real-time VAT Calculator and Auditor  services produce instant and accurate Chinese of other country VAT calculations into your ERP, billing, e-commerce or e-invoicing systems.

Asia Pacific VAT on digital services