China taxes condoms and reduces childcare costs in bid to boost birth rate

China has applied a 13% value-added tax to condoms and contraceptive pills and simultaneously exempted childcare subsidies from personal income tax while introducing an annual childcare allowance, with the changes reported as taking effect on January 1.

China has announced changes to taxation and childcare support that officials say aim to stabilise the country’s falling birth rate. The measures reported as taking effect on January 1 include a new value-added tax on contraceptives and tax and allowance changes intended to reduce childcare costs. Authorities described the package as part of a wider tax overhaul and a set of fertility-related policies introduced in 2024. Key facts: - A 13 per cent value-added tax was applied to condoms and contraceptive pills, reported as the standard VAT rate for consumer goods. - Childcare subsidies were exempted from personal income tax and an annual childcare allowance was introduced, both reported as taking effect on January 1. - Officials said the changes form part of a broader tax overhaul that removed long-standing exemptions and accompanied other measures such as extended parental leave and tax breaks for marriage-related services and elderly care. - Official figures show China’s population declined for a third consecutive year, with 9.54 million births in 2024, and the contraceptive tax drew public concern and online comment about its potential effects. Summary: Officials have presented the package as intended to encourage marriage and childbearing while easing some childcare costs; the new VAT on contraceptives was included as part of the tax changes. The rules are reported as already in effect from January 1 and are part of measures introduced in 2024; next procedural steps were not specified and are undetermined at this time.