How a Smart Factory in Luhe Straightens Out Its Tax Accounts

At the Xinhe industrial park in Luhe county, Shanwei, Shenzhen Aidi Bedding's local plant has built China's first fully numerically controlled and networked sponge foaming line: liquid raw material is foamed and shaped in sealed pipes, a 68-metre sponge block moves by automatic conveyor into the CNC cutting area and is sorted by an unmanned warehouse system, making the whole route from feeding to finished-goods storage a smart manufacturing process. The company says investment in these smart lines alone approaches 20 million yuan. Smart factories take a long time and many steps to land, and tax matters run through equipment procurement, operating-stage cost and R&D accounting, and related-party transactions at the sales stage. Luhe tax authorities used a whole-lifecycle service approach to help build a full-chain tax risk control mechanism. For depreciation, manufacturers buying new fixed assets may shorten the depreciation period or accelerate it, and equipment worth up to 5 million yuan purchased between January 1, 2024 and December 31, 2027 qualifies for one-off pre-tax deduction, easing cash flow in early production. Large input credits from equipment purchases can be refunded through the VAT credit refund scheme where eligible, but tax staff stressed that every input invoice must stand up to verification. Because R&D is embedded in the production line and trial sponges share equipment and raw materials with regular orders, staff helped clarify R&D cost collection so compliance is in place from the start.