China Export Tax Refund Reform Compliance Changes for 2026

China has implemented a new VAT Law accompanying new regulations on 1 January 2026. China’s tax administration has entered a more structured and integrated phase with the issuance of State Taxation Administration Announcement No. 5 of 2026, which introduces new Administrative Measures for VAT and Consumption Tax Refund (Exemption) on Export Businesses. These new measures replace the previous 2012 framework and represents an substantive upgrade rather than a revision.

A key transformation lies in the shift from a focus on “export goods and services” to the broader concept of “export businesses.” This aligns with the VAT Law’s reclassification of processing, repair and replacement activities under general services. As a result, the new framework extends beyond traditional goods exports to encompass cross-border taxable services, while also allowing for future inclusion of additional service trade activities. This change reflects a more comprehensive and forward-looking approach to export tax administration.

The New Measures function as the core administrative framework governing how export tax refunds and exemptions are calculated and declared. These new measures are applied in conjunction to other policy instruments such as Announcement No. 10 of 2026 which defines the eligibility for preferential treatments such as zero-rating or exemption. Businesses must first determine qualification under these preferential policies before applying the procedural requirements set out in the New Measures, reinforcing a clearer distinction between policy entitlement and administrative execution.

Industry-specific adjustments

Concurrent policy changes introduce targeted adjustments to export refund rates in certain sectors. VAT export refunds for Photovoltaic (PV) technology products will be eliminated from April 2026, while battery products will see a phased reduction before a complete removal in 2027. These changes may prompt short-term export acceleration and require affected companies to reassess their pricing strategies, contract terms and manufacturing schedules.

Enhanced administrative requirements

The New Measures also refine compliance processes, including declaration timelines, documentation standards and review procedures. This signals a shift toward more precise and standardised administration, requiring enterprises to strengthen internal controls and ensure alignment with updated regulatory expectations.

To adapt effectively, export businesses should prioritise three areas. First, conduct a comprehensive review of export activities to assess policy applicability and quantify the impact of industry-specific changes. Second, update internal processes, documentation systems and IT infrastructure to meet new procedural requirements, ideally before full implementation deadlines. Third, maintain ongoing engagement with tax authorities and professional advisors to track local guidance, manage uncertainties and address operational challenges during the transition.

1. Assess and benchmark exposure
Enterprises should first conduct a comprehensive review of their export activities, distinguishing between goods and cross-border services. This includes mapping each business line against applicable preferential policies and evaluating the financial and operational impact of industry-specific changes, particularly in affected sectors such as photovoltaics and batteries.

2. Update processes and systems
Next, companies need to align internal procedures with the New Measures. This involves revising tax and compliance workflows, strengthening documentation and record-keeping practices, and ensuring that financial and ERP systems can support updated declaration requirements and calculation logic.

3. Monitor and engage continuously
Finally, businesses should maintain ongoing oversight of regulatory developments by tracking guidance from local tax authorities. Where operations are complex or significantly impacted, engaging professional advisors is advisable. Establishing clear communication channels with tax authorities is also critical to resolving issues efficiently during the transition period.

The Announcement No. 5 of 2026 marks a significant evolution in China’s export tax refund regime, characterised by greater system integration, clearer policy layering and enhanced administrative precision. For businesses, compliance will require not only procedural adjustments but also strategic alignment across tax, operational and commercial functions. Proactive adaptation will be essential to managing risk and maintaining efficiency in this new regulatory environment.