How should taxpayers specifically apply tax rates and collection rates when a single taxable transaction involves two or more different rates?

Question: How should a taxable transaction involving more than two tax rates or levies be specifically applied?

Answer: 1. According to the “Law of the People’s Republic of China on Value-Added Tax” (Order No. 41 of the President of the People’s Republic of China): "Article 13 When a taxable transaction involves two or more tax rates or levies, the applicable tax rate or levy shall be based on the main business of the taxable transaction.

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Article 38 This Law shall come into force on January 1, 2026. The Interim Regulations of the People’s Republic of China on Value-Added Tax are simultaneously repealed."

2. According to the “Implementation Regulations of the Law of the People’s Republic of China on Value-Added Tax” (Order No. 826 of the State Council): "Article 10 The taxable transaction referred to in Article 13 of the VAT Law shall meet the following conditions:

(1) Contains two or more businesses involving different tax rates or levies;

(2) There is a clear principal and subordinate relationship between the businesses. The main business is dominant and reflects the substance and purpose of the transaction; the subordinate business is a necessary supplement to the main business and is based on the occurrence of the main business.

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Article 54 This Regulation shall come into force on January 1, 2026."

3. According to the “Announcement of the Ministry of Finance and the State Taxation Administration on Matters Related to Input Tax Deduction and Other Issues of VAT” (Announcement No. 13 of 2026): Regarding a taxable transaction involving more than two tax rates, a general taxpayer shall apply the tax rate of the main business in the following situations:

(1) When selling software products and providing services such as software installation, maintenance, and training simultaneously, the tax rate of the software products shall apply.

(2) When selling goods such as prefabricated houses, machinery, steel structural parts, and providing installation services simultaneously, the tax rate of the goods shall apply.

(3) In charging for battery replacement, positioning, maintenance, and other services during electricity charging and swapping business, the tax rate of electricity products shall apply.

(4) When providing transportation leasing services and charging for information technology and other services simultaneously, the tax rate of the leasing service shall apply.

Taxpayers engaging in similar taxable transactions shall refer to the above provisions.

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This announcement shall come into force on January 1, 2026. If there are inconsistencies with previous regulations, this announcement shall prevail.

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