China’s Ministry of Finance and the State Taxation Administration have issued Announcement [2025] No. 4, resuming VAT on interest income from newly issued treasury, local government, and financial bonds starting August 8, 2025. Existing bonds issued before that date remain VAT-exempt until maturity.
Source: Ministry of Finance and the State Taxation Administration of the People’s Republic of China
Compiled by Man Xu
On July 31, 2025, China’s Ministry of Finance and the State Taxation Administration jointly issued the Announcement on the VAT Policy for Interest Income from Treasury, Local Government, and Financial Bonds (Announcement [2025] No. 4). Key provisions are as follows:
1.Resumption of VAT on newly issued bonds
Effective August 8, 2025, interest income derived from newly issued treasury bonds, local government bonds, and financial bonds will again be subject to value-added tax (VAT).
For treasury bonds, local government bonds, and financial bonds issued before August 8, 2025—including any subsequent tranches under those existing issuances—the interest income will remain exempt from VAT until the bonds mature.
2.Scope of “financial bonds”
The term “financial bonds” refers to negotiable securities issued by financial institutions incorporated in China, in the interbank and exchange-traded bond markets, which are redeemed and interest paid in accordance with the issuance terms and held by financial institutions.
Issued by the Ministry of Finance and the State Taxation Administration of the People’s Republic of China on July 31, 2025.
Disclaimer: The English translation of the policy measures in this article is for reference only. In case of any discrepancy, the original Chinese text shall prevail.
