China’s Announcement No. 7 of 2026 expands tax incentives for community household services—covering elderly care, childcare, and domestic assistance—by granting VAT and property tax exemptions, reduced taxable income treatment, and fee waivers. Effective from 1 January 2026 to 31 December 2027, the measures require eligible providers to meet documentation and compliance requirements.
China’s Ministry of Finance, State Taxation Administration, National Development and Reform Commission, Ministry of Civil Affairs, Ministry of Commerce, and National Health Commission issued Announcement No. 7 of 2026 on 15 January 2025, which updated the tax incentives for community household services, including elderly care, childcare, and housekeeping services.
The tax incentives are as follows:
- Tax and fee incentives: Institutions providing community-based elderly care, childcare, and domestic services are granted multiple tax and fee benefits, including VAT exemption on service income, inclusion of only 90% of such income in taxable income, deed tax exemption for relevant property, and exemptions from various property, land, and construction-related fees (including specific exemptions for air-raid shelter requirements).
- Property tax exemptions: Real estate and land owned or used (including leased or otherwise obtained) by these institutions are exempt from property tax and urban land use tax.
- Definitions and scope: “Community” services refer to urban or rural local social communities, provided by eligible institutions such as enterprises, public bodies, and social organisations operating from fixed locations. Eligible services include elderly care (daily assistance, nursing, meals, mobility, emergency help, and emotional support), childcare for children up to age three, and domestic services such as care for pregnant women, infants, the elderly, patients, and people with disabilities, as well as cleaning and cooking.
- Documentation requirements: Beneficiaries must retain proof, such as filing receipts, service agreements, and other documentation proving service provision. Failure to provide valid documents or falsification will result in the recovery of benefits and the imposition of penalties under relevant tax laws.
- VAT exemption conditions for domestic services: Domestic service enterprises are exempt from VAT if they sign a tripartite agreement with the worker and client, pay wages and manage/train the worker, and maintain a business management system for worker registration.
- Interdepartmental coordination: Civil affairs, health, commerce, and tax authorities must coordinate daily supervision, establish information-sharing mechanisms, and regularly exchange data to ensure policy implementation.
The incentives will be applied from 1 January 2026 to 31 December 2027.
