Abstract: Developing agricultural product processing industry can help to solve the current agricultural problems, enhance the quality and efficiency of agriculture and increase farmers'income. Tax policy is an important factor of developing agricultural product processing industry. Based on relevant qualitative and quantitative analysis, VAT policy has some problems, affecting the development of agricultural product processing. Therefore, it is necessary to determine reasonable VAT deduction rate, refund payment of VAT for the agricultural products processing enterprises, reduce the burden of small-scale taxpayers for farm produce processing, cancel the purchase document of agricultural products and processing products execute zero rate etc.