From September 2025, certain VAT taxpayers can apply for refunds of unused tax credits. 

China’s Ministry of Finance and State Administration of Taxation released Announcement No. 7 of 2025 on 22 August 2025, introducing a new VAT refund policy. The State Administration of Taxation also issued Announcement No. 20 of 2025 on the same day, detailing the implementation of the new refund policy.

Both announcements will take effect on 1 September 2025.

Starting from the VAT filing period in September 2025, eligible general VAT taxpayers can apply for refunds of their end-of-period retained tax credits. The eligibility criteria includes:

1. Manufacturing and related industries

Taxpayers in the manufacturing, scientific research, software, IT services, and environmental management industries can apply monthly for refunds of their retained tax credits.

2. Real estate development industry

Taxpayers in this industry can apply for a refund of 60% of their newly added retained tax credits if:

  • Must show newly added retained tax credits are greater than zero for six consecutive months (or two consecutive quarters if filing quarterly) as compared to the credit at the end of 31 March 2019;
  • At the end of the sixth month (or second quarter), the newly added retained tax credits must be at least RMB 500,000.
  • For this announcement, taxpayers are considered part of the real estate development and operation industry if over 50% of their total VAT sales and advance payments come from that business, as defined in the National Economic Industry Classification.

3. Other industries

Taxpayers in other industries can apply for a proportional refund if they have:

  •  A retained tax credit exceeding zero for six consecutive months before applying for a refund;
  • The increase in credits is at least RMB 500,000 compared to 31 December of the prior year to which the application for a refund relates;
  • A 60% refund rate applies to the increased retained tax credit up to RMB 100 million.
  • A 30% refund rate applies to the portion exceeding RMB 100 million.

Announcement No.7 mentions that if taxpayers in the real estate development industry do not meet the requirements of point 2, they may apply for a refund of the end-of-period retained tax credits in accordance with the provisions of point 3.

Taxpayers eligible for the policies of this announcement must meet the following conditions:

  • The tax payment credit level is A or B.
  • There has been no fraudulent use of retained tax refunds, fraudulent use of export tax refunds, or false issuance of special value-added tax invoices in the 36 months before the application for tax refund.
  • The applicant has not been punished twice or more by the tax authorities for tax evasion within the 36 months preceding the application for tax refund.
  • Since 1 April 2019, taxpayers have not been entitled to the VAT policies of “immediate collection with immediate refund” or “collection before refund,” unless otherwise specified in the announcement.
  • Taxpayers exporting goods or providing cross-border services must first apply for a tax exemption and refund. After completing this process, they can apply for a retained tax refund if they meet the conditions. However, input tax used for exemption and refund cannot be used for retained tax refunds.
  • Taxpayers who received a VAT refund after April 1, 2019, are ineligible for further refunds unless they repay the refunded amount. Once repaid, they can apply for VAT refunds on taxable transactions from the month of repayment onward.
  • If taxpayers have used the VAT refund or collection-first-then-refund policy since April 1, 2019, and fully repaid the refunded VAT, they can apply for retained tax refunds starting the month after repayment.