China Releases VAT Plus Credit Policy to Support Advanced Manufacturing in 2025
To further stimulate innovation and industrial upgrading, China is reinforcing its commitment to high-tech and manufacturing sectors through a targeted tax incentive—specifically, the VAT plus credit policy for advanced manufacturing enterprises. A recent joint notice issued by the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Administration of Taxation outlines the application criteria and timeline for companies seeking to benefit from this policy in 2025.
Policy Overview
The VAT plus credit mechanism is a preferential tax policy aimed at reducing operational costs for advanced manufacturing enterprises. By allowing additional input VAT deductions, this initiative eases tax burdens and encourages reinvestment in innovation and production capacity.
Eligibility depends on companies maintaining high-tech enterprise status throughout 2025. Additionally, qualifying companies must meet specific benchmarks related to R&D intensity, technological workforce ratios, and the proportion of high-tech products in their portfolio. A crucial financial criterion is that over 50% of their total sales must be attributed to manufacturing activities, with all sales figures excluding VAT.
Application Timeline and Process
There are distinct timelines for companies based on their prior inclusion in the 2024 list and the status of their high-tech enterprise certification:
- For previously listed companies with valid high-tech enterprise qualifications, the 2024 policy benefits end on April 30, 2025. These companies can apply for 2025 inclusion between June 1, 2025, and April 10, 2026.
- New applicants for 2025 can begin their submissions from September 1, 2025, with the same application deadline of April 10, 2026.
Applications are accepted in defined monthly windows—specifically from the 1st to the 10th of each applicable month—making early planning essential for compliance and benefit continuity.
Duration of Policy Benefits
The period during which enterprises can enjoy the VAT plus credit varies according to the validity of their high-tech enterprise certification:
- Full-year valid certifications in 2025 allow access to the policy from January 1, 2025, to April 30, 2026.
- Expiring certifications not renewed within 2025 restrict benefit duration to that calendar year only.
- Timely renewals or new recognitions within 2025 extend eligibility to April 30, 2026.
This approach incentivizes both early renewal of certifications and the onboarding of newly qualified high-tech firms, thus creating continuity and predictability in fiscal support.
Strategic Implications
From a business development perspective, this policy reinforces several priorities within China’s industrial strategy:
- Support for innovation-driven growth: By targeting R&D-intensive, high-tech manufacturers, the government is channeling resources toward sectors most capable of boosting technological self-reliance.
- Encouragement of advanced manufacturing: Aligning the tax benefit with manufacturing-related revenue criteria ensures that subsidies are directed at firms engaged in core production activities, not peripheral services.
- Administrative clarity and long-term planning: Clearly defined application windows and eligibility rules provide a stable framework for companies to integrate tax planning with corporate strategy.
Conclusion
The VAT plus credit policy is more than just a fiscal stimulus. It is a structural tool aimed at advancing China’s high-tech manufacturing base and deepening the integration of innovation within industrial value chains. Companies that align their R&D investment and operational models to meet the eligibility criteria not only gain immediate tax relief but also strengthen their position within China’s evolving industrial policy landscape. As the application period opens, eligible firms are encouraged to prepare documentation early and leverage this policy to fuel their 2025 growth trajectory.