China creates VAT withholding for domestic payers of resident individuals

What changed in detail

The Ministry of Finance and State Taxation Administration issued Announcement No. 28 of 2026 (dated 3 September 2026), promulgating the Measures for Domestic Entities Withholding VAT on Natural Persons. Under Article 15 of the Measures, from 1 November 2026 a domestic unit paying a resident individual for research-and-development, software, design, consulting, radio/film/TV programme production, cultural, or education services becomes the VAT withholding agent, and must withhold VAT (plus applicable surcharges) at the time of payment — calculated as the sales amount times the prescribed levy rate.

Before 1 November 2026 (1 January–31 October 2026), individuals providing these services continue to self-declare under Article 44 of the VAT Law Implementing Regulations. Individuals transacting through internet platforms already covered by platform withholding and declaration rules are excluded from the new withholding duty (Article 14).

What it means

This shifts the collection point from the individual to the payer for a specific list of services — R&D, software, design, consulting, media production, culture and education — that previously relied on self-declaration. Domestic units paying freelancers or independent contractors in these categories need withholding and monthly filing (within 15 days of the following month) operational before 1 November 2026, and should confirm early whether a given payment channel already counts as an internet platform under the existing platform rules, since that exclusion determines who withholds.