The Ministry of Finance ("MOF") released the Announcement on the Policy for Add-up Deductions of Value-added Tax ("VAT") for Advanced Manufacturing Enterprises, with retroactive effect from January 1, 2023.
According to the document, advanced manufacturing enterprises are eligible for add-up deductions of their payable VAT at 5% of their deductible input VAT during the period from January 1, 2023 to December 31, 2027. For the purpose of the document, advanced manufacturing enterprises refer to manufacturing general taxpayers among high-tech enterprises (including their affiliated unincorporated branches). High-tech enterprises are recognized in accordance with the Guo Ke Fa Huo (2016) No.32 rules, while the list of advanced manufacturing enterprises is determined by the relevant authorities.
It is further clarified that input VAT that cannot be deducted from output VAT under current rules shall not be accrued for add-up deductions, and for input VAT that has been accrued for add-up deductions, the add-up VAT shall be lowered accordingly in the transfer-out period of the input VAT.