In a move to reverse its plummeting birth rates, China has officially removed a decades-old tax exemption on condoms, contraceptive pills, and other birth control products. These items are now subject to the standard 13% value-added tax (VAT), effective January 1, 2026, marking the first time in over 30 years that such goods have been taxed nationwide.
The policy change, part of a broader overhaul of China’s VAT law passed in late 2024, ends exemptions introduced in 1993-1994 during the era of the strict one-child policy, when contraception was heavily promoted to curb population growth. At the time, family planning was a national priority to manage resources amid rapid economic expansion.
Now, with China’s population declining for three consecutive years and births hitting historic lows, around 9.5 million in 2024, the government is shifting gears. Officials have paired the contraceptive tax with incentives for families, including VAT exemptions for childcare services, elderly care, and marriage matchmaking agencies.
The Chinese govt has also exempted marriage-related services from VAT. Other pro-fertility measures include annual childcare subsidies, extended parental leave, and campaigns promoting “positive marriage and childbearing attitudes.”
However, the tax can be seen as largely symbolic, as the prices will rise only marginally. A typical pack of condoms, priced at 40-60 yuan ($5.70-$8.50), or a month’s supply of contraceptive pills at 50-130 yuan, will see only modest price increases, just a few yuan per item. The tax could generate about 5 billion yuan ($700 million) in annual revenue, a negligible amount compared to China’s total public budget of over 22 trillion yuan.
China’s birth rate has been falling for the last few decades as a result of the strict implementation of the one-child norm, along with rapid urbanisation. As a result, India overtook China to become the most populous country in the world in 2023. As per the latest estimates, India’s population is around 1.47 billion, while the Chinese population is 1.41 billion.
