Continuing to offer "tax exemption red packets" to foreign investors in Chinese bonds to encourage their purchases. The difference lies in the targeted bonds and tax types, which can be understood as two complementary "red packets": 1. The first "red packet" (Announcement No. 6 of 2026) is for whom: Specifically for foreign institutions investing in Chinese government bonds and local government bonds "issued overseas (e.g., in Hong Kong, London)". What is exempted: Only Value-Added Tax (VAT). Duration of exemption: From August 8, 2025, to December 31, 2027. 2. The second "red packet" (Announcement No. 5 of 2026) is for whom: For foreign institutions investing in all bonds in the "domestic (Mainland China) bond market". The scope is broader, including government bonds, financial bonds, corporate bonds, etc. What is exempted: Both Corporate Income Tax and Value-Added Tax are exempted simultaneously. This incentive is stronger. Duration of exemption: From January 1, 2026, to December 31, 2027. An important exception: If the foreign institution itself has established branches, offices, etc., in China and uses funds from these entities for investment, then the interest income will be subject to normal Corporate Income Tax along with the profits of these entities. This "red packet" does not apply to them.
To summarize simply: Want to buy Chinese government bonds/local government bonds issued overseas? Your interest income is exempt from VAT (the policy is retroactive to August 2025). Want to directly enter the Chinese mainland market to buy various bonds? Your interest income is exempt from Corporate Income Tax and VAT (starting from early 2026). What is the government's aim? It is to maintain policy continuity, stabilize foreign capital expectations, continue attracting international funds to invest in China's bond market, and make the market more open and dynamic. Therefore, for foreign investors, the tax incentive environment for investing in Chinese bonds is overall very friendly and stable until the end of 2027. If specific issues arise in practical operation, it is best to consult professional tax advisors.
Announcement on Continuing the Implementation of the Value-Added Tax Policy for Overseas Institutions Investing in Government Bonds and Local Government Bonds. Announcement No. 6 of 2026 by the Ministry of Finance and the State Taxation Administration. The VAT policy for overseas institutions investing in Chinese government bonds and local government bonds issued overseas is announced as follows: From August 8, 2025, to December 31, 2027, bond interest income obtained by overseas institutions from investing in Chinese government bonds and local government bonds issued overseas shall be exempt from Value-Added Tax. Hereby announced. Ministry of Finance, State Taxation Administration. January 14, 2026. Release Date: January 15, 2026.
Announcement on Continuing the Implementation of the Corporate Income Tax and Value-Added Tax Policy for Overseas Institutions Investing in the Domestic Bond Market. Announcement No. 5 of 2026 by the Ministry of Finance and the State Taxation Administration. To further promote the opening up of the bond market, the relevant tax policies are announced as follows: From January 1, 2026, to December 31, 2027, bond interest income obtained by overseas institutions from investing in the domestic bond market shall be temporarily exempt from Corporate Income Tax and Value-Added Tax. The aforementioned temporary exemption from Corporate Income Tax does not include bond interest income obtained by establishments or sites set up in China by overseas institutions, which is effectively connected with such establishments or sites. Hereby announced. Ministry of Finance, State Taxation Administration. January 13, 2026. Release Date: January 15, 2026.
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