[Global IDT Insights] China VAT Taxable Sales Scope & Sweden Dance Event VAT Cut

Editorial Team – [2026] 184 taxmann.com 484 (Article)

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. China Clarifies the Calculation Scope of the Taxable Sales Amount for Value-added Tax

China has issued Announcement No. 12 of 2026 to clarify the calculation scope of the taxable sales amount for value-added tax (VAT). The announcement has been jointly issued by the Ministry of Finance of the People’s Republic of China and the State Taxation Administration of China to ensure the smooth implementation of the Value-Added Tax Law of the People’s Republic of China while maintaining existing systems and practices.

The announcement specifies certain taxable transactions where the sales amount must be determined based on the balance after deducting specified prices from the total consideration. It also clarifies documentation requirements, invoice issuance rules, and restrictions on input tax deduction where such deductions are applied.

Key aspects of this announcement include:

(i) Sales amount on transfer of financial products shall be determined after deducting the purchase price from the selling price – When a taxpayer transfers financial products, the sales amount is calculated based on the balance after deducting the purchase price from the selling price. Profits and losses from transfers must be offset to determine the sales amount. If a negative balance remains, it may be carried forward to the next tax period, but cannot be carried forward to the next accounting year.

(ii) Weighted average methods may be used to determine the purchase price of financial products – The purchase price may be calculated using the weighted average method or the moving weighted average method. Once selected, the method cannot be changed within 36 months. Taxpayers cannot issue special VAT invoices when transferring financial products.

(iii) Freight paid to carriers is excluded from the sales amount of passenger transport stations – For general taxpayers providing passenger transport station services, the sales amount is calculated after deducting freight paid to the carrier from the total price, including tax received. Invoices must be issued for the full price, including tax. Input tax relating to freight paid to the carrier cannot be deducted.

(iv) Airlines exclude ticket amounts collected on behalf of other airlines – Where an air transport enterprise provides air transport services, the sales amount is calculated after deducting the amounts collected and transferred on behalf of other airlines for ticket sales.

(v) Air ticket agents exclude settlement amounts paid to airlines – For domestic air ticket agency services, the sales amount is calculated after deducting the settlement amount paid to airlines or other agents and related fees. Payments must be supported by IATA Billing and Settlement Plan statements or signed receipts. Agents must issue electronic itinerary invoices or ordinary invoices for the full amount, including tax.

(vi) Amounts relating to overseas flight segments may be deducted – Where air ticket agents provide services for overseas flight segments, the sales amount is calculated after deducting settlement amounts and related fees paid to other entities. Payments to overseas entities must be supported by signed receipts, which may require overseas notarization if questioned by tax authorities. Agents must issue ordinary invoices for the full amount, including tax.

(vii) Examination fees paid to overseas entities are excluded from sales amount – Where overseas entities conduct examinations in China through the National Education Examinations Authority of the Ministry of Education, the sales amount is calculated after deducting examination fees paid to the overseas entity. VAT is payable for educational auxiliary services. Special VAT invoices cannot be issued for these examination fees.

(viii) Visa and authentication fees collected on behalf of authorities are excluded – For visa agency services, the sales amount is calculated after deducting visa fees and authentication fees paid to the Ministry of Foreign Affairs and foreign embassies or consulates in China. Special VAT invoices cannot be issued for such amounts. However, ordinary invoices may be issued.

(ix) Payments received and paid on behalf of principals are excluded for certain import VAT-exempt goods – For goods exempt from import VAT, the sales amount is calculated after deducting payments received from the principal and paid on their behalf. Special VAT invoices cannot be issued for such amounts. However, ordinary invoices may be issued.

(x) Input tax cannot be deducted on amounts excluded from sales value – Where a taxpayer obtains a VAT deduction voucher for the deducted amount, the corresponding input tax cannot be deducted from output tax.

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