On December 25, the 13th Meeting of the Standing Committee of the 14th National People's Congress voted to pass the VAT Law. This law will come into effect on January 1, 2026. Value added tax is the largest tax category in China. Value added tax, as a turnover tax and extra value tax, levies taxes on the value-added generated during the circulation of goods, services, intangible assets, and real estate. It adopts a collection mechanism of "upper collection and lower deduction", which can effectively avoid double taxation while ensuring tax collection, and has good tax neutrality characteristics. In 1993, the State Council formulated the Provisional Regulations on Value Added Tax, which provided regulations for the value-added tax system, and revised the Provisional Regulations on Value Added Tax in 2008 and 2017. Yang Heqing, the director of the Economic Law Office of the Legislative Affairs Committee of the Standing Committee of the National People's Congress, pointed out in an interview with the media that the VAT law should maintain the basic stability of the VAT tax system and the overall level of tax burden. At the same time, it is of great significance to summarize practical experience and reflect the results of reform to improve the VAT system conducive to high-quality development, standardize the collection and payment of VAT, and protect the legitimate rights and interests of taxpayers. The Value Added Tax Law consists of 6 chapters and 38 articles. The scope of value-added tax is defined, and it is clarified that units and individuals who sell goods, services, intangible assets, real estate, and import goods within the territory of the People's Republic of China are taxpayers of value-added tax and shall pay value-added tax in accordance with the provisions of this Law; At the same time, regulations are made for taxable transactions, deemed taxable transactions, and situations that do not belong to taxable transactions. The Third Plenary Session of the 20th Central Committee of the Communist Party of China made comprehensive arrangements for deepening the reform of the financial and tax system, and put forward clear requirements for optimizing the tax system structure, standardizing tax preferential policies, improving value-added tax retention and refund policies, and deduction chains. Yang Heqing introduced that the Value Added Tax Law implements the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China and improves relevant institutional regulations. Firstly, adhere to the principle of statutory taxation. The tax system elements, tax incentives, and collection management of value-added tax that can be clearly stipulated in this law shall be clarified, reducing and regulating the legislative authorization of the State Council. Secondly, standardize tax incentives policies. On the basis of maintaining the current tax rates of 13%, 9%, and 6% unchanged, adjust and improve relevant tax exemption items according to changes in the situation; Authorize the State Council to formulate special preferential policies for supporting the development of small and micro enterprises, supporting key industries, encouraging innovation, entrepreneurship and employment, and donating to public welfare undertakings, reflecting support for key areas and key links; Request the State Council to timely evaluate and adjust the preferential policies for value-added tax. In addition, we will improve the value-added tax retention and refund system. For the portion of input tax in the current period that is greater than the output tax in the current period, taxpayers can choose to carry it forward to the next period for further deduction or apply for a refund, while leaving room for further improvement of the VAT retention and refund policy reform. The value-added tax law also emphasizes the connection with relevant laws. For example, in conjunction with the Customs Law, regulations are made for the collection and management of value-added tax on imported goods; In conjunction with the relevant decisions of the Standing Committee of the National People's Congress, the State Council shall formulate the tax calculation method of value-added tax on Sino foreign cooperative exploitation of offshore oil and natural gas. "Since the 18th National Congress of the Communist Party of China (CPC), the Standing Committee of the National People's Congress (NPC) has attached great importance to tax legislation in accordance with the decision and deployment of the CPC Central Committee on the implementation of the principle of statutory taxation. It has formulated and promulgated 11 tax laws. Fourteen of the current 18 tax categories have completed legislation, covering most of the tax revenue. Important progress has been made in the comprehensive implementation of the principle of statutory taxation." Yang Heqing said that in the next step, the Law Working Committee of the Standing Committee of the National People's Congress will work with relevant parties to accelerate the process of tax legislation in accordance with the decisions and deployment of the Party Central Committee, implement and complete the reform task of comprehensively implementing the principle of taxation legality, and provide a solid guarantee for promoting high-quality development on the track of the rule of law. At the same time, we should handle the relationship between reform and the rule of law, adhere to promoting reform under the rule of law, improve the rule of law in reform, achieve the connection and unity between tax legislation and reform decisions, and promote the timely formulation and revision of relevant tax laws according to the needs of deepening tax reform. (New Society)