China’s Ministry of Finance and State Taxation Administration has issued Announcement No. 11 (2026), establishing clear VAT rules for exports of goods, services, and digital products, with strict 36-month refund timelines and aligned consumption tax treatment, effective 1 January 2026.
The Ministry of Finance and the State Taxation Administration have officially released Announcement No. 11 on 30 January 2026, providing a definitive roadmap for export tax policies under the nation’s newly implemented Value-Added Tax (VAT) Law.
Effective retroactively from 1 January 2026, the announcement harmonises existing export practices with the new legal framework, affecting everything from physical goods to cross-border digital services.
The three pillars of export tax policy
The announcement categorises all export business into three distinct tax treatments based on the nature of the goods and the status of the taxpayer.
| Policy category | Typical scope | Key mechanism |
| VAT Refund (Exemption) | Self-produced goods, R&D services, software, international transport, and technology transfers. | “Exempt, Credit, Refund” for manufacturers; “Exempt & Refund” for trading companies. |
| VAT Exemption | Small-scale taxpayers, agricultural products, “come-and-go” processing and specific items like old books. | No tax is paid on the export, but input taxes cannot be recovered and must be moved to costs. |
| VAT Taxation (Levy) | Fraudulent exports, items with cancelled refund status, and businesses failing to provide proper documentation. | Treated as domestic sales; full VAT must be paid. |
Digital and service exports take centre stage
A significant portion of the announcement focuses on “Cross-border Sales of Services and Intangible Assets.” To qualify for the coveted VAT Refund, services must be “completely consumed outside China.”
Qualifying sectors include:
- High-tech: R&D, software services, and circuit design.
- Creative: Audio-visual production and distribution.
- Logistics: International and aerospace transportation.
- Energy: Contract energy management.
The 36-month rule
Perhaps the most critical update for businesses is the strict timeline for declarations. Taxpayers generally have until 30 April of the following year to gather documents and apply for a refund.
However, the policy introduces a 36-month “statute of limitations” for filing.
If a company fails to declare its export refund or exemption within 36 months of the export date (calculated in natural days), the transaction will be deemed a domestic sale, and the company will be forced to pay tax on that revenue.
Consumption tax alignment
For goods subject to Consumption Tax (such as high-end watches, tobacco, or luxury cars), the policy mirrors the VAT treatment. If a product qualifies for a VAT refund, it is also exempt from Consumption Tax, and any tax paid in previous production stages can be refunded. Conversely, if VAT is levied due to compliance issues, the Consumption Tax must also be paid.
While the announcement repeals several regulations from 2012 and 2014, the core message is one of stability.
By “continuing current systems and practices,” the government is signalling to international markets that China’s export environment remains predictable. However, the heavy emphasis on “actual receipt of foreign exchange” and “documented evidence” suggests that the era of loose oversight is firmly in the rearview mirror.
The new rules officially take effect on 1 January 2026.
Any export business occurring before 31 December 2025 will still follow the legacy rules, specifically avoiding the 36-month “deemed domestic sale” penalty.
