China will apply a 13% value-added tax (VAT) on condoms and other contraceptives beginning January 1, abolishing an exemption that has existed since the nationwide VAT system was implemented in 1993.
The shift, which was included in a VAT law signed in 2024 to modernize the tax system, comes as Beijing steps up efforts to increase its decreasing birthrate. VAT generates roughly 40% of China’s overall tax revenue.
The move follows years of policy “carrots” since China abandoned its one-child policy, including permitting up to three children per couple, IVF discounts, cash subsidies, and extra paid leave for newlyweds; yet, the possibility of more expensive contraceptives has received internet mockery.
“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 provides tax advantages for child care and “marriage introduction services.” This year, the government set aside 90 billion yuan ($12.7 billion) for its first universal childcare subsidy—3,600 yuan per year for each child under three—and announced plans to broaden national health insurance to cover all childbirth-related costs.
Despite the incentives, demographic pressures persist. The birthrate in 2024 increased to 6.77 per 1,000 people, but it remains significantly below historical levels, and an aging population has been driving overall population decline for at least three years.
Reports of officials approaching women about their menstrual cycles have raised fears that authorities are shifting away from incentives and toward “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.”
An assistant professor at the University of Michigan, Yun Zhou, stated that the tax signals “what desirable family behavior 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 growth is likely to be moderate. According to Lee Ding of Dezan Shira & Associates, the policy will raise approximately 5 billion yuan each year, which is insignificant in comparison to China’s 22 trillion yuan public budget. “We do not believe revenue generation is the primary motivation behind extending VAT to contraceptives,” Ding states.
