On March 28th, Premier Li Keqiang chaired the State Council executive meeting to determine measures to deepen the reform of value-added tax and further reduce the tax burden on market entities.
From May 1st, 2018, the value-added tax rate of industries such as manufacturing will fall from 17% to 16%, and the value-added tax rate for goods such as transportation, construction, basic telecommunications services and agricultural products will fall from 11% to 10%. %. In addition, the annual sales standards for small-scale taxpayers in industry and commerce are uniformly raised to 5 million yuan, and some of the advanced manufacturing, modern service enterprises and power grid enterprises will be refunded for the deductible input tax within a certain period of time.
VAT rates in manufacturing and other industries fell from 17% to 16%
The above three measures will reduce the tax burden of market entities by more than 400 billion yuan throughout the year, and domestic and foreign-funded enterprises will benefit equally. The meeting pointed out that this move is to further improve the tax system, support the development of the real economy such as manufacturing, small and micro enterprises, and continue to reduce the burden on the market.
Reduce burden manufacturing, transportation industry
This year's government work report is clear, to further reduce corporate tax burden. This includes improving the VAT system, adjusting the tax rate in the third and second directions, focusing on reducing the tax rates of manufacturing, transportation and other industries, and raising the annual sales standards for small-scale taxpayers.
On March 28, the State Council executive meeting made specific arrangements for this. Judging from the disclosure of the meeting, the VAT rate has not yet been involved in the third and second gears.
The State Council executive meeting decided that from May 1st, 2018, the first is to reduce the value-added tax rate of manufacturing and other industries from 17% to 16%, and to increase the value-added tax of goods such as transportation, construction, basic telecommunications services and agricultural products. The tax rate has dropped from 11% to 10%. This policy is expected to reduce tax by 240 billion yuan for the whole year.
In accordance with the Provisional Regulations on Value-Added Tax in China, units and individuals that sell goods or process, repair and repair labor services, sales services, intangible assets, real estate, and imported goods are VAT payers.
After last year's reform, China's current VAT rate is three, with 17%, 11% and 6% respectively. Among them, sales of goods, labor, tangible movable property leasing services, etc., the tax rate is 17%; sales of transportation, postal, basic telecommunications, construction, real estate leasing services, sales of real estate, etc., the tax rate is 11%; sales services, intangible assets, tax rate 6%.
Hu Yijian, a professor at Shanghai University of Finance and Economics, told reporters in the 21st Century Business Herald that this time the VAT rate is lowered, mainly for industries that are supported by key industries such as manufacturing, transportation, construction, basic telecommunications services, and agricultural products.
VAT rates in manufacturing and other industries fell from 17% to 16%
The report of the 19th National Congress pointed out that to build a modern economic system, the focus of economic development must be placed on the real economy. These include accelerating the construction of manufacturing powers, accelerating the development of advanced manufacturing industries, promoting the deep integration of the Internet, big data, artificial intelligence and the real economy; supporting the optimization and upgrading of traditional industries, accelerating the development of modern service industries; and strengthening infrastructure networks such as water conservancy, railways, highways, and water transport. Construction and so on.
The Ministry of Industry and Information Technology reported at the beginning of this year that China is now fully promoting the "Made in China 2025" strategy, and the international competitiveness of manufacturing enterprises is constantly increasing. At the same time, however, China's manufacturing enterprises face problems such as high cost, low profit margin, and heavy tax burden, which have inhibited the formation of core competitiveness of enterprises to a certain extent. It is recommended to reduce the first major tax category - the value-added tax rate, enhance the strength of China's manufacturing enterprises, and promote the transformation and upgrading of the real economy.
Raise the standard for small-scale taxpayers
The State Council executive meeting also unified the VAT small-scale taxpayer standards. The annual sales standards of small-scale taxpayers of industrial enterprises and commercial enterprises were 500,000 yuan and 800,000 yuan respectively, and this time they were raised to 5 million yuan.
The meeting pointed out that enterprises registered as general taxpayers should be allowed to register as small-scale taxpayers within a certain period of time, so that more enterprises can enjoy the preferential taxation at lower levy rates.
The value-added tax rate of small-scale taxpayers in China is 3%, which is lower than the three-standard tax rate. Small-scale taxpayers cannot make deductions; however, enterprises with higher annual sales than small-scale taxpayers must apply the standard tax rate.
Xu Wen, a researcher at the China Academy of Fiscal Science, told reporters in the 21st Century Business Herald that raising the original standard of 500,000 yuan and 800,000 yuan will enable more small and micro enterprises to become small-scale taxpayers. At the same time, these annual sales are lower than Companies with a price of 5 million yuan have more choices. They can choose to become small-scale taxpayers or choose to become general taxpayers.
The State Council executive meeting also pointed out that enterprises and grid enterprises that meet the requirements of advanced manufacturing, R&D and other modern service industries such as equipment manufacturing will be refunded once in a certain period of time.
According to the 21st Century Business Herald reporter, there are precedents for preferential policies for refunding VAT allowances for specific support industries. For example, in the policy promulgated in 2001, for the nationally approved integrated circuit major project enterprises, the value-added tax at the end of the period due to the purchase of equipment is allowed to be refunded.
This preferential policy covers a wider range of industries, including advanced manufacturing, modern service industries, and power grid companies. Xu Wen told reporters in the 21st century economic report that the enterprise input tax deductible can not be completed. In the long run, the tax will be offset gradually, but this will occupy the enterprise funds, and it will be beneficial to the enterprise to give a one-time refund.
"In the past, some wind power enterprises had a large amount of input tax on procurement equipment, and the VAT input tax would take several years to deduct. Those enterprises with large initial investment in machinery and equipment often accumulate a relatively large amount of input tax," Xu Wen said.