What changes have occurred in the 1% tax rate adjustment for the new VAT policy?

What changes in the 1% tax rate adjustment?

Upon entering the reporting period, Xu Zan, the financial controller of Ningbo Zhizhi Technology Co., Ltd., could not wait to take stock of the company's financial statements: last month, the company's sales amounted to 79 million yuan, and the value-added tax should be 439,900 yuan. After the introduction of the new policy of value-added tax reform, enterprises will be subject to VAT taxable sales or imported goods. The original tax rate is 17% and 11%, and the tax rate is adjusted to 16% and 10% respectively. This company can receive preferential relief of more than 500,000 yuan in the current period. .

Xu Zan said: "Don't underestimate the 1% tax rate of this downward adjustment. Our base is large and the amount of concessions is still considerable. We can use the saved taxes for the company to develop new technologies and products and promote the continuous development of the company."

According to the latest data from the State Administration of Taxation, the VAT reform implemented on May 1 this year will reduce the tax rate of the construction industry and the transportation industry, which are originally applied to the manufacturing industry with a tax rate of 17%, and the construction rate of the transportation industry by 1%. The effect of the tax reduction policy began to appear in the filing period in June, with a cumulative tax reduction of 95.9 billion yuan from June to August. Since July, 18 advanced manufacturing and modern service industries and power grid enterprises have been granted tax rebate for tax refunds. From July to August, a total of 78.6 billion yuan was refunded. The two total tax cuts were 174.5 billion yuan.

Both sides of the supply and demand benefit

Value-added tax is the first tax category of nearly 40% of China's tax revenue. The VAT rate is reduced. In this space, the price of products is lowered to expand sales, which becomes a rational choice for enterprises. This choice will be reflected to the price through the transmission of the VAT deduction chain, which will benefit consumers. Consumer benefits will in turn stimulate market demand, and further expand the market size of the enterprise, thus forming a double benefit for both supply and demand. A virtuous circle.

The 1% tax dividend is directly reflected in the retail price of some products. On May 1st, Apple cut the final pricing of all goods for sale at the 17% tax rate by 0.85% to 0.9%. Mercedes-Benz, Jaguar, Land Rover, Lincoln and many other car companies issued information on suggested retail price adjustments through announcements and statements. The comprehensive tax rate of cross-border e-commerce products such as Jingdong Global Purchase, Amazon Overseas Purchase, and Netease Koala Sea Purchase decreased from 11.9% to 11.2%, and the comprehensive tax rate of high-end cosmetics decreased from 26.4% to 25.5%...

For the home appliance industry, home appliance retailers have reduced the import invoice tax rate of 17% from the previous inventory to 16%, and the one-percentage deduction is quite impressive for home appliance retailers with an average gross profit margin of only 5%. This means that companies can make greater profits and attract profits to attract consumers, thus achieving the goal of increasing sales. Liu Wei, head of Qingdao Suning Finance, said: “Reducing the tax rate saves the cost of the company, so that we can better benefit the consumers and achieve a win-win situation. During the promotion period, more than 70% of the discounts on home appliances and digital products were greater than in previous years. This is inseparable from the reduction in tax rates."

In the commercial retail industry, with the reform of the tax rate, the price adjustment has been gradually transferred from the upstream production enterprises to the sales enterprises, and the sales prices of the products have also declined to varying degrees. The person in charge of AEON Supermarket said that due to the reduction of tax rate, the procurement cost of enterprises has decreased, and the rental cost has been lowered, which has enabled enterprises to increase various promotional methods so that consumers can fully enjoy this bonus.

Promote high quality development in manufacturing

From 17% to 16%, although it seems to be only 1%, for the manufacturing industry, the tax reduction effect is very obvious. According to the Ministry of Goods and Services Taxation of the State Administration of Taxation, after the tax rate adjustment, the annual tax reduction of the manufacturing industry exceeds one-third of the total tax reduction of all industries, the corporate tax burden is effectively reduced, the capital pressure is significantly reduced, and development confidence continues to be boosted. .

Baoshan Iron and Steel is a leading enterprise in the steel industry. After the tax rate is lowered, the company is expected to not only reduce the value-added tax by RMB 117 million, but also save the additional tax of urban construction tax with a value-added tax of more than 27 million yuan. In addition, foreign companies also benefit equally. Eaton Industry is a wholly foreign-owned enterprise. Due to the lower tax rate, the company expects to pay less than 9 million yuan in taxes and fees in the same year, which will have a positive impact on corporate profits and business development.

For the traditional manufacturing industry, the tax rate reduction is also of great significance in stimulating its transformation and upgrading and inspiring new vitality while reducing taxes and reducing losses. Jilin Jianlong Iron and Steel Co., Ltd. is a steel manufacturing enterprise with an annual production capacity of 3 million tons, integrating coking, iron making, steel making and steel rolling. After the tax rate is lowered, it is estimated that the annual tax reduction will be about 28 million yuan. The company plans to put the saved funds into the “annual production of 800,000 tons of cold rolling projects”, accelerate the speed of project promotion, and enhance the company's competitiveness and profitability. In addition, the company plans to increase the upgrading of environmental protection facilities, further reduce pollutant emissions, and transform the company into a green steel enterprise to enhance the company's soft power.

Deepening the tax cuts released by the VAT reform will also enable enterprises to invest more abundant liquidity into new economic fields such as intelligence and digitalization, and promote the deep integration of next-generation information technology such as the Internet, big data and artificial intelligence with the manufacturing industry. Accelerate the development of intelligent manufacturing and drive the high-quality development of the entire advanced manufacturing industry.

The construction industry enjoys the reform dividend

The construction industry is the pillar industry of the national economy. Since May 1, 2016, the construction industry has been included in the pilot reform of the camp, and the value-added tax deduction chain has been opened to properly resolve the problem of double taxation in the original tax system. This year, the applicable tax rate for construction services has dropped from 11% to 10%, which has enabled the construction industry to enjoy the VAT reform dividend and create a more favorable tax environment for its development.

Construction engineering measurement, subcontracting, machinery leasing, etc. have all been affected by the downward adjustment of this tax rate. In order to cope with the tax rate adjustment, the Ministry of Housing and Urban-Rural Development issued the “Notice on Adjusting the Value of Value-added Tax on Construction Projects”, which adjusted the value-added tax rate of the project cost from 11% to 10%, and passed the dividend of the tax reduction rate in time. The chain is conducted. Li Jing, deputy director of the Finance Department of China Railway Engineering Group, said that the favorable policy has brought the most direct sense of gain to the enterprise. “After the tax rate is lowered by 1 percentage point, the tax burden on construction projects that apply the general taxation method will inevitably decline, and the overall enterprise will be driven. The tax burden has dropped. With a gross profit margin of 12% and a net profit margin of 2%, the original application rate is 17%, 11% tax rate, and the procurement cost accounts for 47% of the total cost. For example, the tax rate is reduced by nearly one-fifth after the tax rate is lowered."

Dai Dehong, deputy director of the financial management department of China Power Construction Group, believes that the reduction of the VAT rate can effectively reduce the tax burden of the construction industry, and the overall profitability of the industry will be improved from a macro level.

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