China has extended corporate income tax and VAT exemptions for foreign institutional investors’ bond interest income through 2027, and also renewed VAT relief for investments in sovereign and overseas local government bonds.
China’s Ministry of Finance and the State Administration of Taxation made two announcements on 15 January 2026 that extend tax exemptions for foreign institutional investors in its bond market.
Under Announcement No. 5 of 2026, the corporate income tax and VAT exemption on bond interest income is renewed for 1 January 2026 to 31 December 2027, replacing the previous policy that expired at the end of 2025. However, the exemption does not apply to interest linked to a foreign institution’s establishment in China.
Additionally, Announcement No. 6 of 2026 extends the VAT exemption for foreign investors in Chinese sovereign bonds and overseas-issued local government bonds. This VAT relief is effective from 8 August 2025 through 31 December 2027.
