June 29, 2018 Source: Economic Information

The Ministry of Finance and the State Administration of Taxation jointly issued the "Notice on Tax Policies for the Return of Value-Added Taxes on Some Industries in 2018" to clarify the value-added of modern service industries such as equipment manufacturing and advanced manufacturing and R&D in 2018. The tax at the end of the tax period will be refunded. So far, China's three new policies for deepening the reform of value-added tax have all come to the fore.

The so-called allowance, that is, when the enterprise's output tax is less than the input tax, it will not pay taxes, and the input tax that has not been deducted can be left to the next period to continue to deduct. The taxpayer has not deducted the amount of the output tax, and the input tax to be deducted for the next period is called “retaining tax”.

The existence of tax arrears squeezes the funds of the company and creates pressure on cash flow. In the last year's cost reduction survey, the China Academy of Fiscal Science found that in the current situation where the VAT rate is coexisting, the VAT tax is in the “high-in, low-sell” industry (such as the agricultural machinery industry and the production service industry). ) and start-up companies are ubiquitous and the amount is large.

From the perspective of international taxation practice, there are two ways to deal with the amount of tax paid. One is to refund the tax refund to the enterprise, and the other is to carry forward the deduction in the next period. China has adopted a system that carries forward the deduction of the next period.

"This increase in tax rebate is a major reform of China's VAT system, marking an important step for China's value-added tax to modern VAT." Li Xuhong, director of the Institute of Finance and Taxation and Application, Beijing National Accounting Institute, According to the international practice, the value-added tax is tax-neutral and can be deducted at the intermediate level. Only when the tax refund is allowed, can the real chain be deducted and the VAT neutral. Most countries with VAT in the world have adopted tax rebates.

According to the notice, the industry that refunds the tax at the end of the VAT period includes advanced manufacturing, R&D and other modern service industries and power grid enterprises, and also needs to meet the taxpayer’s tax credit rating of Grade A or B. Specific calculation methods are specified.

"The equipment manufacturing, power grid and other enterprises selected this time are all capital-intensive enterprises, and the value-added tax is relatively large. This is a real move and a big move that can significantly reduce the burden on enterprises. It can stimulate economic vitality." Chinese Academy of Social Sciences Jiang Zhen, an associate researcher at the Institute of Strategic Studies, said.

Li Xuhong said that considering the difficulty of tax refund operation and the problem that the tax rebate involves the pressure of fiscal expenditure, and because of the inclination of advanced manufacturing and technological innovation enterprises, this notice selected some industries and did not expand to all. The industry also stipulates conditions such as time, which is in line with actual needs.