China's Tax Reform Fuels Home Service Sector, E-Home Plans AI Leap

FUZHOU, China – February 06, 2026 – China's domestic service industry is on the cusp of a significant transformation, propelled by a comprehensive 2026 tax reform designed to foster growth, professionalization, and innovation. In response, Fuzhou-based E-Home Household Service Holdings Limited (NASDAQ:EJH), an integrated home services provider, has announced a bold strategy to leverage these new incentives to upgrade its services, invest in technology, and solidify its market position.

The government's new policies, which continue value-added tax (VAT) exemptions and introduce a suite of other financial benefits, signal a strong official commitment to developing the nation's service economy. For companies like E-Home, this represents a pivotal moment to accelerate growth plans and redefine the standards of household support services.

A Landmark Policy Shift for Domestic Services

The 2026 tax reform package is a multi-faceted initiative aimed at both the supply and demand sides of the domestic service market. At its core, the policy continues to allow eligible enterprises to claim reductions or full exemptions on VAT for income generated from domestic services. This measure, part of China's first-ever comprehensive VAT Law effective January 1, 2026, is designed to directly improve the cash flow of service providers.

Beyond VAT relief, the reform introduces several key deductions that lower the corporate tax burden. Companies can now deduct social insurance contributions made for their employees, as well as deduct training expenses for service personnel at an increased rate. This latter provision is a clear incentive for businesses to invest in upskilling their workforce, a critical step toward professionalizing an industry often characterized by informal labor.

Furthermore, the policy creates a more favorable environment for consumers. Taxpayers supporting elderly parents or raising children are now eligible for special additional deductions on their personal income tax. For instance, the deduction standard for childcare has been raised to 2,000 yuan per child per month, a move that directly reduces the financial strain on families. This policy is expected to unlock significant latent demand for services like nannies, elder care, and general housekeeping by making them more affordable for millions of households.

Mr. Wenshan Xie, Chairman and CEO of E-Home, commented on the sweeping impact of the reform. "The specific benefits of the 2026 tax reform for the domestic service industry are as follows: 1. Reducing corporate operating costs directly lowers the tax burden on domestic service enterprises, freeing up more capital for improving service conditions, enhancing compensation for domestic workers, and elevating service quality. 2. Stimulating market demand through the special additional deductions for individual income tax alleviates the financial burden of family elder care and childcare, thereby boosting demand for domestic services and expanding the industry's market potential. 3. Standardizing industry development: Policy implementation compels home service enterprises to strengthen financial management and compliant operations, driving the industry toward standardization and professionalization. Tax reform will promote sustainable industry growth, enhance societal recognition of the sector, and spur innovative development."

E-Home's Blueprint for an AI-Powered Future

With the financial flexibility afforded by the tax incentives, E-Home is embarking on an ambitious plan to modernize its operations and service offerings. The company announced it will fully leverage the new policies to enhance financial management, strengthen personnel training, and, most notably, integrate artificial intelligence into its core business.

E-Home plans to progressively roll out a "human-machine integrated service model." While specific details of the technology are still emerging, the concept points toward using AI for optimizing staff deployment, personalizing service packages, and increasing overall operational efficiency. The capital freed up by tax savings will be instrumental in funding the research, development, and training required to implement such a technologically advanced system.

This strategic pivot is not just about cutting costs; it's about elevating the quality and consistency of service. By using technology to handle scheduling, logistics, and routine communications, the company aims to allow its human workforce to focus on delivering high-quality, personal care. The goal is to use the tax benefits to increase staff deployment rates and, as the company states, propel its performance to "new heights by 2026."

Fueling a Nationwide Service Boom

The impact of these policies extends far beyond a single company's balance sheet. They are set against the backdrop of profound demographic and economic shifts within China. The nation's population aged 60 and over reached 310 million by the end of 2024, creating an urgent and growing demand for reliable elder care. Simultaneously, government policies are increasingly supportive of families, as evidenced by the nationwide childcare subsidy program that has already benefited over 24 million people.

By making professional domestic services more financially accessible, the tax reforms are poised to convert latent need into active market demand. This stimulation is crucial for an economy where service retail sales are already outpacing goods sales, growing 5.5% year-on-year in 2025. The government's strategy is clear: cultivate a robust internal market for services as a primary driver of high-quality economic development.

The push for formalization, driven by the requirement for compliant financial management to access tax benefits, is expected to raise standards across the entire industry. As companies like E-Home invest more in accredited training programs, the skills and societal recognition of domestic service workers are likely to improve, creating a more stable and professional workforce.

Established in 2014, E-Home has built a comprehensive service ecosystem that includes not only housekeeping and nanny services but also home appliance installation, smart home maintenance, and public cleaning. Operating through both business-to-consumer (ToC) and business-to-business (ToB) channels, the Nasdaq-listed firm is well-positioned to capture growth across multiple segments. Its diverse portfolio, which even includes subsidiaries in pharmaceutical distribution and corporate training, provides a broad foundation to capitalize on the expanding needs of Chinese families and businesses in this new, supportive policy environment.