China has ended more than three decades of VAT-exempt status for condoms and other birth control products, in a move linked to its efforts to raise birth rates amid an intensifying demographic crisis.
The decision forms part of a new VAT law, approved in late December 2024, which removes birth control items from the list of exempt goods.
From January 1st 2026, condoms and similar products will be subject to a 13% VAT. The measure carries a built-in twelve-month phase-in period, giving authorities and businesses time to update their systems and adjust procedures before the new tax is applied.
As the VAT exemption on contraceptives is withdrawn, officials are introducing a set of incentives aimed at supporting family life, notably scrapping or reducing VAT for childcare providers, elder-care facilities, and services linked to marriage.
The initiative comes against the backdrop of a steep fall in China’s birth rate after many years of stringent population controls. The one-child policy, enforced from 1979 to 2015 under Deng Xiaoping, relied heavily on workplace pressure, extensive promotion of contraception and sterilisation, and the imposition of fines.
The policy also led to a significant number of forced abortions and having children confiscated by the State.
This was only lifted in 2015.
The long-term effects of past policies include a shrinking workforce, a rapidly ageing population, and a male-skewed sex ratio shaped by historical son preference and sex-selective practices.
In 2016, journalist Mei Fong, who authored the book “One Child: The Story of China’s Most Radical Experiment”, explained that one of the consequences of this policy was to destabilise the male-to-female ratio in Chinese society.
“When you create a system where you would shrink the size of a family and people would have to choose, then people would…choose sons,” she told Fresh Air’s Terry Gross.
“Now China has 30 million more men than women, 30 million bachelors who cannot find brides…They call them guang guan – ‘broken branches.’ That’s the name in Chinese. They are the biological dead ends of their family.”
In 2023, the World Bank estimated China’s total fertility rate at roughly 1.0, which is about half the 2.1 replacement level needed to sustain a stable population.
The demographic pressures now confronting China reflect a wider global challenge, as countries around the world struggle with similarly low fertility trends and their economic and social consequences.