Redefining Boundaries and Compliance: A Strategic Review of China’s New VAT Law

China’s first comprehensive VAT Law, effective 1 January 2026, transforms a patchwork of regulations into a formal statutory framework. This article takes a strategic view of the reform, analysing four themes central to corporate readiness. First, it traces how the VAT Law redraws the boundary between taxable, deemed-taxable and non-taxable event – narrowing deemed-sales rules while preserving scope for anti-avoidance challenges. Second, it explains the shift to a consumption-based source rule for services and the strengthened withholding mechanism for non-resident supplies in a cross-border context. Third, it evaluates changes that advance VAT neutrality, including potential creditability of loan-interest VAT. Finally, it discusses administrative modernization in China. This article provides a comprehensive roadmap for understanding the new law ahead of 2026.