SHANGHAI (Reuters) -China has reinstated value-added tax (VAT) on interest income from new bonds issued by government and financial institutions starting Friday, ending a long-standing tax break to ease growing fiscal pressure.

The Ministry of Finance announced last week that the VAT exemption would no longer apply to interest income from government bonds, local government bonds, and financial firm-issued debt issued on or after Aug. 8, 2025.

Interest income from bonds issued before that date – including subsequent tranches – will remain exempt until maturity, the ministry said.

“With China’s fiscal deficit hovering near historic highs and interest payments on government bonds continuing to rise annually, we believe it is natural for policymakers to consider ways to moderately boost rev

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