China is set to impose a value-added tax (VAT) on condoms and other contraceptives for the first time in three decades, as the country tries to boost its birthrate and modernise its tax laws.
From 1 January, condoms and contraceptives will be subject to a 13% VAT rate – a tax from which the goods have been exempt since China introduced nationwide VAT in 1993.
The measure was buried in a VAT law passed in 2024 in an effort to modernise China’s tax regime. VAT accounts for nearly 40% of China’s total tax revenue.
After imposing a strict one-child policy for more than 30 years, China has over the past decade been introducing a suite of “carrots” to induce people to have more children in a bid to boost the falling birthrate.
As well as raising the limit on the number of children permitted per couple to three, provinces have been experimenting with offering discounts on IVF treatment and cash subsidies for extra children. Some local governments offer newlyweds extra days of paid leave to encourage people to tie the knot.
But the fact that condoms and contraceptives look set to become more expensive has been met with ridicule on social media. “What is wrong with modern society? They are truly going to extreme lengths just to make us have children,” wrote one user on Weibo.
The new VAT law also includes a tax break for childcare and “marriage introduction services”.
This year, the government also allocated 90bn yuan ($12.7bn) for its first nationwide childcare subsidy programme, offering 3,600 yuan annually for each child aged under three. And on Saturday it announced plans to expand its national healthcare insurance programme to cover all childbirth related expenses.
But incentives have had little effect. In 2024, the birthrate was 6.77 per 1,000 people, a slight increase on 2023, but still far below historical levels. A rising death rate caused by an ageing population means China’s population has been shrinking for at least three years.
Now there are concerns authorities may be turning to “sticks” to achieve the national policy goal of more babies.
Women in some areas have reported receiving phone calls from local government officers asking about their menstrual cycles and childbearing plans. In December, Chinese media reported that women in a county in south-west China’s Yunnan province were being required to report the date of their last period to the local authorities. The local health bureau said the data collection was necessary to identify pregnant and expectant mothers.
Responding to the news, one social media user wrote: “Today they require all women to report the time of their period, tomorrow it will be reporting the time of sexual intercourse, the day after tomorrow they’ll be calling to urge intercourse during the ovulation period … [this is] mass breeding.”
Hiking taxes on condoms is largely a symbolic move. A typical packet of condoms costs 40-60 yuan ($5.70-$8.50). The contraceptive pill, which can be bought over the counter, costs 50-130 yuan per one month packet.
“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 based in Guangdong province. “However, this measure is unlikely to have a significant effect on increasing the fertility rate.”
Yun Zhou, an assistant professor of sociology at the University of Michigan, said that the new tax was unlikely to affect people’s decision-making, but it signified from the government “what desirable family behaviour should be”. Zhou added that if access to contraception did become difficult, “the brunt of the negative effects will be borne by women, particularly by disadvantaged women.”
China’s plan to modernise its tax system includes codifying into law taxes that were previously governed by administrative regulations. But although revenues are badly needed by cash-strapped local governments, some of which have been struggling to actually pay out the childcare subsidies they have promised, the condom tax is unlikely to bring in a significant amount of money.
Lee Ding, a manager at Dezan Shira & Associates, an Asia-focused professional services firm, estimates that taxing contraceptives will bring in an additional 5bn yuan annually, a drop in the ocean compared to China’s general public budget revenue of 22tn yuan ($3.1tn). “We do not believe revenue generation is the primary motivation behind extending VAT to contraceptives,” Ding said.
Additional research by Lillian Yang
