Breaking down tax system barriers between industries is crucial for advancing tax cuts and fees to support the real economy. Using the micro-level data from the nationwide enterprise registration database (SAIC) for 2009-2015 , this study examines the impact of the business tax replaced with value added tax reform (VAT reform) on regional entrepreneurial activities. The findings indicate that the VAT reform significantly increased the level of regional entrepreneurship. Furthermore, implemented specifically in the service sector, the reform not only facilitated the establishment of production systems with specialization of production and optimized regional industrial structures, but also enabled cross-industry transmission of entrepreneurship-promoting effects through industrial input-output linkages, indirectly boosting the development in related downstream manufacturing sectors. Overall, during the VAT reform period, the government incurred an average tax reduction cost of approximately 550 000 Yuan per newly established enterprise. Additionally, every 100 000 Yuan in tax reduction costs enabled the channeling of about 10 000 Yuan into the real economy sector. This research provides a quantitative policy evaluation reference for enhancing tax policies aimed at supporting the development of the real economy in the future.