China to Introduce VAT on Contraceptives from 2026: Response to Demographic Crisis

Starting January 2026, China will impose a 13% tax on contraceptives. This decision has been made due to the declining birth rate in the country. The tax will apply to both medical products for pregnancy prevention and condoms. This category of goods has been exempt from taxation since 1993.

Over the past three years, there has been a decrease in the number of newborns in China. In 2024, the number of newborns was 9.54 million, nearly half of what it was in 2016, when the restrictions on the number of children in a family were lifted.

Measures to Increase Birth Rate

The 'one family - one child' policy was abolished in 2015, and since 2021, the Chinese government has allowed citizens to have up to three children. However, even after these changes, the birth rate continues to decline due to high child-rearing costs, professional risks for women, and other circumstances.

Alongside the introduction of the contraceptive tax, the Chinese government is expanding support for families. It is planned to provide subsidies of 3,600 yuan (about $500) annually for each child up to three years old. Additionally, authorities are implementing an annual payment of $500 aimed at stimulating birth rates, which is expected to increase from 2022 to 2024. This program is aimed at improving demographics and is anticipated that over 20 million families will benefit from these measures.

In summary, China is introducing a tax on contraception due to the decline in the number of newborns. Moreover, the Chinese government is taking measures to support families and stimulate birth rates.