Bengbu Introduces Landmark Tax Reforms to Attract Foreign Investment in 2025
Bengbu has unveiled a sweeping tax reform package for foreign investors effective January 1, 2025, cutting the effective corporate income tax rate for qualifying 外商投资企业 (Foreign-Invested Enterprise, FIE, wàishāng tóuzī qǐyè) to as low as 15% — a reduction of 10 percentage points from the standard 25% CIT rate. The policy targets firms in advanced manufacturing, green energy, and digital services, and is projected to attract 5 billion RMB ($690 million) in new foreign direct investment (FDI) over the next three years, up from 3.2 billion RMB in 2024.
The reforms come as Bengbu, a rising industrial hub in Anhui Province, competes with coastal cities like Suzhou and Nanjing for foreign capital. According to the Bengbu Municipal Commerce Bureau, the city currently hosts 187 registered FIEs, employing over 45,000 workers. With the new incentives, the bureau expects that number to increase by 30% by 2027. “These measures are designed to make Bengbu a first-choice destination for global manufacturers relocating supply chains,” said Deputy Mayor Li Jie at the January 10 press conference. “We are aligning with China’s wider strategy to open up the inland economy.”
Overview of the Tax Reform Package
The reforms, formalized in Bengbu Document No. 8 (2025), replace a patchwork of local subsidies with three clear tiers of tax relief. For FIEs in 先进制造 (advanced manufacturing, xiānjìn zhìzào), the corporate income tax is reduced to 15% for the first five years of operation, with a further 50% exemption on local surtaxes. For firms in 绿色能源 (green energy, lǜsè néngyuán) — including solar, wind, and battery recycling — the CIT rate drops to 10% for the first three years if the investment exceeds 200 million RMB. All other FIEs with registered capital above 5 million RMB receive a 20% CIT rate for the first three years, down from the standard 25%.
Value-added tax (VAT) policies are also updated. FIEs exporting goods from Bengbu now qualify for a full VAT refund within 15 business days, down from the previous 30-day standard. This change is expected to boost the city’s export volume, which stood at 12.8 billion RMB in 2024, by an estimated 8% annually. The reforms also extend 个人所得税 (individual income tax, gèrén suǒdé shuì) breaks to foreign executives: a 30% subsidy on IIT for the first three years, capped at 500,000 RMB per person per year.
Key Incentives and Sector-Specific Benefits
The table below compares the old and new tax structures across Bengbu’s priority sectors. The most aggressive reductions target green energy, reflecting China’s national push to achieve carbon neutrality by 2060.
| Sector | Old CIT Rate (2024) | New CIT Rate (2025+) | Duration | Minimum Investment |
|---|---|---|---|---|
| Advanced Manufacturing | 25% | 15% | 5 years | 100 million RMB |
| Green Energy | 25% | 10% | 3 years | 200 million RMB |
| Digital Services | 25% | 15% | 5 years | 50 million RMB |
| Other FIEs (>5M RMB) | 25% | 20% | 3 years | 5 million RMB |
Additional incentives include land-use fee reductions of up to 40% for factories built in the Bengbu High-Tech Industrial Development Zone, and streamlined visa processing for expatriate managers. The city has also established a one-stop service center at the Bengbu Administrative Service Hall specifically for FIEs, aiming to cut business registration time from 15 working days to 5.
Expected Impact on Foreign Investment
Bengbu’s FDI inflows hit 3.2 billion RMB in 2024, a 12% increase year-on-year, but still far behind Hefei’s 18.7 billion RMB. The new reforms are designed to close that gap. According to the Bengbu Municipal Bureau of Statistics, the city has identified 37 potential anchor investors — mainly German and Japanese automotive parts suppliers and Taiwanese electronics assemblers — that are currently in active negotiations. The tax break is expected to tip decisions in Bengbu’s favor over rival inland cities like Zhengzhou and Xi’an.
The reforms also piggyback on national-level programs. FIEs in Bengbu that meet 高新技术企业 (High and New Technology Enterprise, gāo xīn jìshù qǐyè) criteria can combine the local 15% rate with national R&D super-deductions, effectively lowering their effective tax rate to below 10%. “This creates a powerful compounding effect,” said Sophia Chen, a tax partner at KPMG Shanghai. “For a manufacturing FIE spending 50 million RMB annually on R&D, the combined savings could exceed 8 million RMB per year.”
However, critics caution that the reforms may not fully compensate for Bengbu’s logistical disadvantages. The city lacks a direct international airport — the nearest hub is Hefei Xinqiao International Airport, 130 km away — and its port on the Huaihe River handles only 1/10th the container volume of Nanjing Port. “Tax cuts are important, but infrastructure gaps remain a real barrier for time-sensitive exports,” noted David Yang, director of the Anhui Foreign Investment Association. He cited a survey showing that 64% of foreign investors rank logistics as their top concern when choosing inland Chinese cities.
Despite these challenges, early signals are positive. Since the policy announcement on January 10, 2025, the Bengbu Commerce Bureau reports 14 preliminary investment letters of intent, totaling 1.1 billion RMB in planned capital. One of the first likely beneficiaries is German auto parts manufacturer ZF Friedrichshafen AG, which is considering a 300-million-RMB plant to supply electric vehicle components to NIO’s Hefei factory.
Implementation Timeline and Compliance
FIEs must apply for the reduced rates through the Bengbu Municipal Tax Service by March 31, 2025, to qualify for retroactive benefits from January 1. Applications require audited financial statements and a project plan proving the investment meets sector criteria. The tax bureau will conduct annual compliance reviews, and any FIE that fails to meet investment milestones may face clawback of 50% of the tax savings received in the previous year.
For foreign executives, the individual income tax subsidy requires employer certification and a minimum three-year employment contract with a Bengbu-based FIE. The city has allocated 100 million RMB annually for these subsidies through 2028. Meanwhile, the 增值税 (value-added tax, zēngzhí shuì) export refund process has been fully digitized via the newly launched “Bengbu Tax Express” WeChat mini-program, allowing FIEs to submit documents and track refunds in real time.
NEXT STEPS
- Evaluate eligibility for the 15% CIT rate — Determine if your FIE’s sector matches Bengbu’s priority list. Our Foreign Investor Tax Eligibility Checklist walks through the criteria and required documentation.
- Prepare the application by March 31, 2025 — Missing the deadline means losing retroactive benefits. Use our FIE Registration Deadline Calculator to build your timeline.
- Assess logistics alongside tax savings — Tax cuts alone won’t solve supply chain bottlenecks. Our Anhui Inland vs. Coastal Logistics Cost Comparison helps you weigh the full cost picture.
— Anhui Gateway —
Remote China market entry support, built around execution.