China starts charging VAT on drugs and contraceptives to stimulate the birth rate
China has abolished the exemption from value added tax (VAT) applied to drugs and contraceptive devices, a measure that has been in force for more than three decades as part of its efforts to promote the birth rate, local media have reported.
The reform, introduced into the new VAT Act, includes condoms, contraceptive pills, intrauterine devices and other reproductive control methods, which will be taxed at a rate of 13%, a standard for consumer goods, according to the Yicai economic portal.
The Xinhua news agency has explained that the purpose of the tax exemption was to ensure access to basic contraceptives in the past, but needs have changed with the construction of a "birth-friendly society."
The measure is part of a broader set of policies to reverse the decline in births, in a context of ageing of the population, falling marriages, and three consecutive years of population decline. The country's fertility rate is one ofthe lowest in the world.
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