China is implementing a new tax system that includes a 13% sales tax on contraceptives while exempting childcare services from value added tax (VAT), effective January 1st, according to reports from BBC News. The move is part of a broader effort by the world's second-largest economy to boost birth rates, which have been declining in recent years.
The overhaul of the tax system, announced late last year, removes many exemptions that had been in place since 1994, when China was still enforcing its one-child policy. In addition to childcare, marriage-related services and elderly care will also be exempt from VAT. This is part of a larger strategy that includes extending parental leave and providing cash handouts.
Faced with an aging population and a sluggish economy, Beijing has been actively trying to encourage more young couples to have children. The changes to the tax system are the latest in a series of measures aimed at addressing the country's demographic challenges.
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