China to hike tax on condoms in attempt to boost falling birth rate

"China is set to impose a value-added tax (VAT) on condoms and other contraceptives for the first time in three decades, as the country tries to boost its birthrate and modernise its tax laws. From 1 January, condoms and contraceptives will be subject to a 13% VAT rate a tax from which the goods have been exempt since China introduced nationwide VAT in 1993. The measure was buried in a VAT law passed in 2024 in an effort to modernise China's tax regime. VAT accounts for nearly 40% of China's total tax revenue."

"After imposing a strict one-child policy for more than 30 years, China has over the past decade been introducing a suite of carrots to induce people to have more children in a bid to boost the falling birthrate. As well as raising the limit on the number of children permitted per couple to three, provinces have been experimenting with offering discounts on IVF treatment and cash subsidies for extra children. Some local governments offer newlyweds extra days of paid leave to encourage people to tie the knot."

"But the fact that condoms and contraceptives look set to become more expensive has been met with ridicule on social media. What is wrong with modern society? They are truly going to extreme lengths just to make us have children, wrote one user on Weibo. The new VAT law also includes a tax break for childcare and marriage introduction services. This year, the government also allocated 90bn yuan ($12.7bn) for its first nationwide childcare subsidy programme, offering 3,600 yuan annually for each child aged under three. And on Saturday it announced plans to expand its national healthcare insurance programme to cover all childbirth related expenses."

From 1 January, China will subject condoms and other contraceptives to a 13% value-added tax after a three-decade exemption that dated to the 1993 nationwide VAT introduction. The change was included in a 2024 VAT law intended to modernise the tax regime; VAT supplies nearly 40% of national tax revenue. The government has introduced incentives to raise the birthrate, including allowing up to three children, IVF discounts, cash subsidies, paid leave for newlyweds, a 90bn yuan childcare subsidy (3,600 yuan annually per child under three), expanded childbirth insurance coverage, and tax breaks for childcare and matchmaking services. The 2024 birthrate was 6.77 per 1,000 and the population continues to shrink due to ageing and rising deaths. Social media reacted with ridicule to the contraceptive tax.

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