In a surprise policy shift, China has announced plans to begin taxing interest income earned on bonds issued by the government and financial institutions—a move that marks a significant departure from decades of tax exemption in the country’s bond market.
The announcement has caught investors off guard, prompting a swift reassessment of fixed income portfolios amid concerns about lower after-tax returns. The new tax policy could dampen demand for Chinese sovereign and policy bank debt, particularly among institutional investors who had relied on the tax-free status to enhance yield.
While the full implementation details have yet to be released, the move signals Beijing’s growing focus on broadening its tax base, even as it risks unsettling already fragile investor sentiment in domestic debt markets.
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collecting tax starting August 8tax exemption that has been in place since the 1990ssurprise policy change affects nearly 70% of China's total bond market by outstanding amountanalysts estimate that with the general 6% value-added tax rate, the policy will introduce investment costs for newly-issued bonds and widen the yield gap between existing and new bonds by approximately 5-10 basis points This article was written by Eamonn Sheridan at investinglive.com.Hence then, the article about china has announced plans to begin taxing interest income earned on bonds was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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