China began requiring employers and other payers to withhold value-added tax (VAT) from payments to individuals for certain services on Nov. 1. The rule comes from measures the State Taxation Administration issued on Sept. 3. Payers must now deduct VAT and surcharges, on top of the individual income tax already withheld.
Beijing University of Science and Technology and Huzhou University posted implementation notices on Oct. 26 and 23. The rules cover seven service categories: research and development, software, design, consulting, broadcast and film production, culture, and education. Huzhou’s notice classifies translation and market research as consulting, and lectures, training and educational assessments as education. Retirees, outside personnel and students are included.
A Huzhou administrative staffer told a reporter the rule applies nationwide to “all units, not all universities” and that the tax was not collected before.
Transactions with one payer of at least 1,000 yuan ($149) before tax are subject to withholding. Smaller amounts are exempt. VAT is charged at a reduced 1 percent rate through the end of 2027. Taxable transactions from Jan. 1 to Oct. 31 remain self-reported, and anyone who already paid will not be taxed twice.
Legal scholar Lu Chenyuan said the withholding closes a gap, since individuals’ service income largely escaped business tax before the 2016 reform. Financial scholar Si Ling said VAT on such income has a legal basis but was loosely enforced. He linked the tighter collection to the government’s need for revenue amid the economic downturn, calling the effort “unprecedented.”
On X, one user posted complaints from a university worker who asked why VAT applies after income tax was already paid.
Source: Radio Free Asia, November 2, 2026
https://www.rfa.org/mandarin/shangye/jingji/2026/11/02/china-ministry-of-finance-state-taxation-administration-value-added-tax-higher-education-institutions/