Three VAT Changes for Tourism and Culture from 2026
From 2026, China's value-added tax (VAT) rules for the tourism and culture sector will see three key adjustments. Travel agencies can deduct input VAT on purchased catering services, scenic spots no longer pay VAT on free-entry events, and ancillary services within venues are taxed at 6% as cultural services. Small-scale taxpayers face a 3% levy rate, with a temporary 1% rate until end-2027.
Value-added tax (VAT) policy for the tourism and culture industry will undergo three significant adjustments starting in 2026, covering taxable calculation, deduction rules, and exemption scope. Under the VAT law and related implementing rules effective from 2026, conditions for travel agencies to deduct input VAT on purchased catering services and other items will change, scenic spots providing services free of charge will no longer be treated as taxable deemed transactions, and the VAT filing categories for ancillary services within tourist venues will be unified.
The first change allows travel agencies to deduct input VAT on purchased catering services. Before 2026, VAT regulations explicitly prohibited taxpayers from deducting input VAT on catering services, daily resident services, and entertainment services from output VAT, meaning travel agencies could not claim deductions for catering services purchased on behalf of clients. Starting in 2026, Article 22 of the VAT law adjusts these provisions, restricting input VAT deductions only for catering services, daily resident services, and entertainment services purchased and directly consumed by taxpayers. When travel agencies purchase group meals and integrate catering services into tourism products for resale, such purchases do not constitute direct consumption. After obtaining compliant special VAT invoices, they may normally declare and deduct input VAT.
The second change eliminates VAT on ticket revenue from events such as free admission days at scenic spots. Previously, scenic spots holding free admission days, charity performances, or cultural experience events were required to treat these as deemed sales of services and pay VAT based on normal ticket prices. The VAT law rephrases "deemed sales" as "deemed taxable transactions" and adjusts the specific scope, so scenic spots providing services free of charge no longer fall within the deemed taxable transaction scope, and related activities are exempt from VAT. The input VAT corresponding to such free services is not classified as non-deductable non-taxable transactions and may be deducted according to regulations.
The third change unifies ancillary services within tourism venues as cultural services for tax filing. A 2026 announcement by the Ministry of Finance and the State Taxation Administration on specific matters concerning the scope of VAT levies clarifies that such revenue is uniformly subject to VAT as cultural services. General taxpayers are subject to a 6% VAT rate, while small-scale taxpayers apply a 3% collection rate, and may enjoy a phased preferential rate of 1% until December 31, 2027.
Tourism services continue to enjoy the differential taxation preferential policy, but must meet corresponding conditions, and differential taxation and input VAT deduction cannot be applied simultaneously. The ticket exemption scope under Article 24, Item (9) of the VAT law is limited to first-admission ticket revenue from cultural activities held by memorial halls, museums, cultural centers, management agencies of cultural relic protection units, art galleries, exhibition halls, calligraphy and painting academies, and libraries, as well as cultural and religious activities held at religious venues. This refers to ticket revenue collected when visitors enter the main gate, and does not include ticket revenue from special exhibitions, exclusive performances, or temporary events held inside the venues.