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China Officials Dismiss Tax Hike Rumors After Tech Selloff

Published: Feb. 3, 2026 7:47 p.m. GMT+8

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Rumors of tax adjustments across multiple industries in China triggered market volatility Tuesday, including a selloff in tech stocks, but local tax officials said the speculation has no factual basis.

Hong Kong-listed Tencent Holdings Ltd. fell more than 5% in morning trading before paring losses to close down 2.9%.

The drop followed market chatter about possible value-added tax (VAT) hikes for the gaming and broader internet sectors, where Tencent derives a significant share of its revenue.

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Rumors of imminent VAT hikes caused volatility in Chinese markets, notably impacting Tencent, which closed down 2.9%.
Authorities denied plans for VAT increases on internet or financial sectors, confirming no such provisions in new VAT laws for 2026.
Only China’s telecom sector faces a VAT rise, with mobile data, SMS, and broadband services taxed at 9% (up from 6%) from January 2024.

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Who’s Who

Tencent Holdings Ltd.: Tencent Holdings Ltd. experienced a 2.9% stock decline following rumors of potential VAT hikes in China's gaming and internet sectors. These rumors were later clarified by tax officials as unfounded, with no legal basis for industry-wide VAT increases. Only the telecommunications sector saw a VAT adjustment.

China Mobile: China Mobile, one of China's largest telecom operators, announced that the VAT on its mobile data, SMS, and broadband services increased from 6% to 9% starting January 1. This change in taxation for the telecommunications sector was stipulated in a notice issued by the Ministry of Finance and the State Taxation Administration.

China Unicom: China Unicom, one of China's three largest telecom operators, has increased VAT on its mobile data, SMS, and broadband services. This rise, from 6% to 9%, took effect on January 1st, as per a joint notice from the Ministry of Finance and the State Taxation Administration.

China Telecom: China Telecom is one of China's three largest telecom operators. Along with China Mobile and China Unicom, it announced a VAT increase on mobile data, SMS, and broadband services. This tax rose from 6% to 9%, effective January 1st, following a notice from the Ministry of Finance and the State Taxation Administration.

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What Happened When

2026-01-01：: The effective date for the VAT rate increase on mobile data, SMS, and broadband services in China, as communicated by the telecom operators.

2026-01-01：: China's VAT law and its implementing regulations take effect, without introducing industry-wide VAT rate increases.

2026-01-30：: The Ministry of Finance and the State Taxation Administration issued a notice stipulating a VAT increase on certain telecom services.

2026-02-01：: China Mobile, China Unicom, and China Telecom announced that VAT on mobile data, SMS, and broadband services would be raised to 9% from 6%, effective January 1, 2026.

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