Issue invoices only for real transactions, and use the small-taxpayer exemptions available to you
In China, eligible small-scale VAT taxpayers with monthly sales below RMB 100,000 or quarterly sales below RMB 300,000 are exempt from VAT. The applicable 3% levy is reduced to 1% during the same policy period. Obtaining false deductible invoices is not tax planning: the basic criminal band is up to 3 years plus RMB 20,000–200,000.
What it takes
Free. Do not buy or sell invoices or route sham transactions for others. Invoice and report actual business.
What you may gain
Small-scale taxpayers use the simplified VAT method. China's VAT Law exempts sales below the threshold. From January 1, 2026 through December 31, 2027, thresholds are RMB 100,000 monthly, RMB 300,000 quarterly, or RMB 1,000 per transaction/day. During that period the 3% levy becomes 1%, except real-estate sales/rentals and land-use-right transfers. Falsely issuing special VAT invoices or other deductible invoices without real transactions carries up to 3 years or criminal detention plus RMB 20,000–200,000. Issuing for others or oneself, asking others to issue for oneself, and arranging issuance all count. Larger tax amounts bring 3–10 years; very large amounts bring 10 years or more or life. Chinese rules apply.
Context & considerations
The VAT Law took effect January 1, 2026. The earlier small-taxpayer announcements, No. 19 of 2023 and No. 1 of 2023, ceased applying or were repealed. Threshold amounts stayed the same but the legal basis changed; this entry uses the new document. The cited Criminal Law page is the 1997 text; Article 205 was subsequently amended, and only verified, unchanged sentencing bands are given here. VAT exemption does not exempt income tax. False cost invoices are false invoicing, not tax saving.
Research & references
NPC Standing Committee (2024). VAT Law, effective January 1, 2026, Article 23. https://fgk.chinatax.gov.cn/zcfgk/c100009/c5237365/content.html; Ministry of Finance and State Taxation Administration (2026). Announcement on VAT Preferential Policy Transition After the VAT Law Takes Effect, No. 10 of 2026, Articles 1, 2 and 6. https://fgk.chinatax.gov.cn/zcfgk/c102416/c5247434/content.html; National People's Congress of China (1997). Criminal Law, Article 205. https://www.spp.gov.cn/spp/fl/201802/t20180206_364975.shtml