Huzhou's tax authorities are supporting the local traditional Chinese medicine (TCM) sector with policy guidance, risk prevention and targeted services across planting, processing and product innovation.
Policy delivery in step with the farming cycle: At Huzhou Luteng Ecological Agriculture, growers were harvesting lingzhi mushrooms as the harvest season arrived. Owner Yan Jianguo noted that herb cultivation requires heavy upfront investment in greenhouses and strain breeding. The tax bureau timed its exemption guidance to the cultivation calendar, clarifying the conditions for self-produced agricultural products to be tax exempt and reminding growers to issue invoices and declare properly at harvest. Luteng declared 1.7 million yuan of herb sales as exempt last year and is reinvesting the savings in greenhouses and better strains.
Compliance foundation for smart manufacturing: Zhengda Qingchunbao Pharmaceutical, China's first smart TCM factory, has deeply integrated traditional preparation methods with the internet, cloud computing and artificial intelligence, moving from experience-based to science-based manufacturing; three of its products were included in the Zhejiang TCM industry brand list. Its finance lead noted that the additional deduction for R&D expenses is hard to compute when R&D and production draw materials simultaneously. The bureau added such high-frequency risks to its monitoring model and built an early-warning, tracking and coaching loop. The company now manages R&D projects in a closed loop and claimed more than 5.97 million yuan in additional R&D deductions in 2025.
Services moved forward: Anji Hexiang Agriculture mass-produces cordyceps flower and has developed powders and tablets, moving from raw materials to finished goods. Because the boundary between primary processing (exempt) and deep processing (taxable) was unclear, the bureau visited early, when the new product lines were still on the drawing board, and provided tailored guidance on cost accounting and the applicable boundary, giving the company confidence to expand.
Huzhou will continue to extend policy delivery, compliance guidance and refined services across the whole TCM supply chain.