Industries that have already implemented VAT
Camping to increase the full rollout of the more complete deductible chain, deductible items increased, manufacturing and pre-pilot industries benefited a lot
For the camping to increase, "all industries" mainly includes two parts: First, the industry that has already implemented the value-added tax, including the The first is the industry that has already implemented VAT, including the manufacturing industry and the transportation, postal service, telecommunication industry and modern service industry that have been included in the pilot camp; the second is the four major industries that will be included in the pilot camp, including the construction industry, the real estate industry, the financial industry and the living service industry.
"With the full rollout of the camping change, the deduction chain is more complete, and many previously piloted taxpayers, as well as former VAT taxpayers such as those in the manufacturing industry, will see a drop in their tax burden." Li Wanfu, director of the Tax Section of the State Administration of Taxation, believes that manufacturing production are required to have factory buildings and warehouses, and enterprises are a large amount of expenditure whether they build or rent. The four major industries and new real estate into the pilot at once, to reduce the burden on the real economy, to promote the transformation and upgrading of the manufacturing industry is of great significance.
Taking the transportation industry as an example, when it was first included in the camping transformation pilot, many input tax credits could not be deducted, and some enterprises experienced a rise in tax burden. With the full rollout of the camping change, the scope of deductibility is further expanded, and the tax burden of these enterprises will see a gradual downward trend.
"Every expansion of the camping reform will lead to an increase in the number of deductible items, thus reducing the tax burden on enterprises." The person in charge of Anji Automobile Logistics Co., Ltd. introduced that at the initial stage of the Camp Reform Increase, due to the limitations of the pilot scope, the enterprise could not obtain enough input tax credits, and the tax burden increased.In 2014, the enterprise renewed the means of transportation and obtained more input tax credits. The full rollout this year will further increase the number of deductible items, and the tax burden situation of enterprises will further improve.
"With the inclusion of the four major industries in the camping change, more travel and conference fee items incurred in the daily operation of enterprises, as well as expenditures on the purchase and construction of logistics assets can be deducted, which will roughly produce a 3-4 percent drop in the tax burden." Liu Xiaoqi, financial manager of Sinotrans Fujian Co Ltd, said this will help improve the competitiveness of logistics enterprises and help them tide over the difficulties.
"Highway tolls, an important cost for transportation companies. Transitional arrangements have been made for this in the rules of this camping change pilot, and the actual tax burden of transportation enterprises will be further reduced in the future after the toll road and bridge tolls are able to obtain VAT invoices." Li Wanfu said.
The construction and real estate industries
have changed from the original 3 percent and 5 percent business tax rates to an 11 percent VAT rate, but the tax burden of the entire industry will not increase
The camping to increase the full-scale rollout of the construction and real estate industries, the financial sector, and the living services industry are all included in the scope of the pilot project, with the construction and real estate industries subject to an 11 percent rate, and the financial sector and the living services industry subject to a 6 percent tax rate. The construction and real estate industries are subject to a tax rate of 11%, while the financial and living services industries are subject to a tax rate of 6%. Society is generally concerned about the construction and real estate industries from the original 3% and 5% business tax rate, to 11% VAT rate, the tax rate will increase the tax burden will not rise?
"It is actually a misunderstanding that a higher VAT rate than business tax rate will increase the tax burden of enterprises." According to Bai Jingming, deputy director of the China Institute of Fiscal Science, business tax is levied on the turnover of enterprises, while VAT is levied on the value-added of goods and services, and the tax bases of the two are very different. Although the VAT rate has been raised, the tax burden of the two sectors will not only not increase but even be reduced because input tax credits can be applied.
Bai Jingming analyzed that the main inputs of the construction industry are steel, bricks and mortar, cement and other building materials, which can be deducted at the 17 percent VAT rate, and the deduction is quite strong. In particular, the program has also made transitional policy arrangements for the business mode of enterprises contracting work or contracting work without materials. General taxpayers in the way of construction services provided by the clear contract labor, you can choose to apply the simple tax method of taxation, compared with the original business tax rate of 3% levy, the tax burden of the enterprise is largely unchanged.
Similarly, the real estate industry, which has a current business tax rate of 5 percent, will be subject to an 11 percent tax rate after the reform, but the tax burden will not rise due to the increase in input credits. Under the reform plan, for real estate developers applying to become general taxpayers and paying tax at the 11 percent VAT rate, they can deduct the cost of land premiums from their sales. Among real estate development costs, land premium is the largest piece, accounting for 30% to 40% of the overall cost. The fact that land premiums can be deducted from sales is crucial to reducing the tax burden on real estate companies. In addition, small-scale taxpayers in real estate development enterprises, selling self-developed real estate projects, are taxed at a 5% levy rate, and the tax burden of such enterprises is also not increased.
The financial and living services industries
Changed from the original 5 percent business tax rate to a 6 percent VAT rate, the industry's tax burden will be significantly reduced
"How to ensure that the tax burden of all industries will only be reduced but not increased is both the key point and the difficult point, and the reform program has made a great deal of effort in this regard." Hu Yijian, a professor at Shanghai University of Finance and Economics and director of the Institute for Public **** Policy and Governance, said that in order to achieve this goal, the program not only gives full consideration to the design of the tax system, but also extends the retention of the original preferential policies of the business tax, and at the same time also introduces corresponding supporting measures for the characteristics of various industries.
Financial services are mainly business activities of financial insurance, such as lending services, direct charge financial services, insurance services and transfer of financial commodities. The living services industry covers a wide range of areas, including cultural and sports services, education and medical services, tourism and entertainment services, catering and accommodation services, residents' daily services and other living services.
"From the comparison of tax burden alone, the 6 percent VAT rate, without taking into account input tax credits, is equivalent to the 5.66 percent business tax rate, which is very close to the current business tax rates of these two industries." Hu Yijian explained that after the camp reform, the financial industry and living services can deduct more input tax, and the tax burden of the two industries will be significantly reduced.
Financial industry office space is mostly high-grade real estate, and the degree of electronic information technology, input, through the acquisition of real estate and related equipment, as well as technical services outsourcing, etc., the financial industry to achieve a greater likelihood of tax reduction. From the perspective of the relevant rules, the financial industry's original preferential policies on business tax are basically retained and continued after the reform. For example, interest income from financial interbank transactions is exempted from value-added tax (VAT), life insurance of more than one year's duration is exempted from VAT within the pilot program, and agricultural insurance is exempted from VAT.
Life service industry is almost all-encompassing and closely related to people's lives. General taxpayers apply 6% tax rate, deductible inputs are also varied. For example, open the gym, rent, the purchase of fitness equipment can be used as input deduction; open the restaurant, purchase and rent face, store decoration, kitchen equipment, etc., can also be used as input deduction.
"There is another obvious feature of the life service industry, which is the large number of small and micro enterprises. These enterprises, as small-scale taxpayers, will be subject to a simplified levy at a 3% rate after the camp reform, and compared with the original 5% business tax rate, these enterprises will have a tax cut of about 40%, which is very obvious." Hu Yijian emphasized.
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