•China’s flag
China will impose a 13% value-added tax (VAT) on condoms and other contraceptives from January 1, ending an exemption in place since the nationwide VAT system was introduced in 1993.
The change, included in a VAT law passed in 2024 to modernise the tax regime, comes as Beijing intensifies efforts to raise its declining birthrate. VAT accounts for nearly 40% of China’s total tax revenue.
The move follows years of policy “carrots” after China abandoned its one-child policy, including allowing up to three children per couple, IVF discounts, cash subsidies, and extra paid leave for newlyweds. Still, the prospect of pricier contraceptives has drawn online ridicule.
“What is wrong with modern society? They are truly going to extreme lengths just to make us have children,” one Weibo user wrote.
The new law also offers tax breaks for childcare and “marriage introduction services.” This year, the government earmarked 90bn yuan ($12.7bn) for its first nationwide childcare subsidy—3,600 yuan annually for each child under three—and announced plans to expand national health insurance to cover all childbirth-related expenses.
Despite incentives, demographic pressures persist. The birthrate in 2024 edged up to 6.77 per 1,000 people but remains far below historical levels, while an ageing population has driven overall population decline for at least three years.
Reports of officials contacting women about menstrual cycles have heightened concerns that authorities may be shifting from incentives to “sticks.”
Experts say the tax is largely symbolic. “Now that China’s birth policy has shifted to encouraging births and no longer promotes contraception, it is reasonable to resume taxing contraceptives,” said He Yafu, an independent demographer in Guangdong.
“However, this measure is unlikely to have a significant effect on increasing the fertility rate.”
Yun Zhou, an assistant professor at the University of Michigan, said the tax signals “what desirable family behaviour should be,” warning that if access to contraception became harder, “the brunt of the negative effects will be borne by women, particularly by disadvantaged women.”
Revenue gains are expected to be modest. Lee Ding of Dezan Shira & Associates estimates the measure will raise about 5bn yuan annually—tiny against China’s 22tn yuan public budget.
“We do not believe revenue generation is the primary motivation behind extending VAT to contraceptives,” Ding said.
