Textile Service Tax Rebate Rate To 13% "Zero Profit" Dilemma Is Expected To Ease

The rumor started at the beginning of the year has finally become a fact. Yesterday, the Ministry of Finance and the State Administration of Taxation issued the notice on adjusting the export rebate rate of some textiles and garments, announcing that the export tax rebate rate of some textiles and garments increased from 11% to 13% today.

The notice also stipulates that the export tax rebate rate of some bamboo products will be raised to 11%.

Cancel the export tax rebate for Korean pine nuts, some pesticide products, some organic arsine products, paclitaxel and its products, rosin, silver, zinc zero, some coating products, some battery products and carbon anode.

The export tax rebate rate adjustment has been implemented since August 1st, and the specific execution time shall be based on the export date specified by the customs declaration of export goods.

The relevant departments stressed that for the commodities that involve the cancellation of export rebates, where an enterprise has already signed an export contract and the price can not be changed before August 1st, the export enterprise may register the contract with the local tax authorities responsible for the export tax refund before August 15th.

Where an export contract is registered, where the declaration is made before January 1, 2009, the export tax rebate rate will be adjusted according to the adjustment rate.

Those who fail to file the overdue and the declaration of export after December 31, 2008 shall be carried out according to the adjusted export tax rebate rate.

Expert interpretation: textile and garment enterprises will increase profits by about 17000000000

"The positive effect of the callback rate of export tax rebate is direct and rapid."

Many industry experts and business executives said that for most of the general trade export enterprises, it is absolutely good and can directly reduce the export cost, which will undoubtedly provide timely help for the export of textile and clothing that is experiencing "cold winter".

Liu Huan, vice president of the school of Finance and public administration, Central University of Finance and Economics, analyzes that this will help domestic enterprises to achieve balanced development in two aspects, namely, export and internal supply, effectively stimulate exports, and even help achieve the goal of raising foreign funds.

According to Liu Huan analysis, raising the export tax rebate rate of textile and garment industry can make relevant enterprises obtain real and solid interests.

As the return profits increase, the price of the products can continue to decrease, thus reducing the export cost of the enterprises.

The advantage of price can attract more customers and improve the international competitiveness of these enterprises. Moreover, it is expected that these enterprises will gradually achieve a virtuous circle in the form of external support, and really solve these enterprises' difficulties.

Under the current global economic recession and domestic economic slowdown, the new measures can become an effective means to boost our economy.

Experts said that under the premise of constant product sales price, the export tax rebate rate callback percentage point, equivalent to 1% of the total export volume of enterprises directly increased to corporate profits.

According to statistics, the total export volume of domestic textiles and clothing in 2007 was 167 billion 900 million US dollars, of which 70% of general trade accounted for 70%. According to the annual export growth of 10%, the total export volume of textiles and clothing could reach US $184 billion 700 million in 2008, and the total export volume of general trade mode could reach about US $130 billion.

The export tax rebate rate will be adjusted by 2 percentage points, and the total profit of the textile and garment industry will increase by 2 billion 600 million US dollars. According to the exchange rate of 6.8, the profit of enterprises will increase by 17 billion 680 million yuan.

"The increase in the export tax rebate rate will account for 14% of the total profit of the textile industry, and the profit margin will increase by 0.6 percentage points."

Experts said.

Fu Tian shares also issued a notice on adjusting the export rebate rate of textiles and garments last night.

The announcement said that because of the larger proportion of the company's exports, the export tax rebate rate adjustment will have a greater impact on the company's performance in the second half of the year and in the future.

According to the company's financial department, according to the export sales figures for 1-6 months in 2008, the profit before tax was increased by about 15 million yuan in the past six months.

Kim Feida also said that the implementation of this policy will have a positive impact on the company's annual profits, and it is expected to increase the net profit of the company in the second half of this year by 4 million -500 yuan.

　　服裝紡織行業陷入“零利潤”困境

Background

This is the first pullback since China launched the foreign trade policy of lowering the export tax rebate rate in 2006.

Since 2006, the state has repeatedly reduced the export tax rebate rate of some industries, including textiles and garments, in order to change the growth mode of enterprises and enhance competitiveness and reduce the large trade surplus. However, under the pressure of the recent slowdown in the US economy and the acceleration of RMB appreciation, many enterprises have slowed down their exports and their profits have declined sharply.

Customs data show that in May, China's exports of textile and apparel grew by 5.7 percentage points less than 1-5 months, coupled with larger cost expenditures, the profits of garment export enterprises shrank seriously.

Wang Yu, vice president of the China Textiles Import and Export Chamber of Commerce, said that the appreciation of RMB has a certain impact on the excipient industry, and the price of raw materials has soared and profits have not increased correspondingly.

Every appreciation of the renminbi has a percentage point, and textile export profits will decline to varying degrees.

In addition, the continuous increase in interest rates by the central bank has greatly increased the financing cost of textile enterprises.

In addition, because of the sharp rise in electricity, freight, labor and water charges, the textile industry, whose gross profit margin was only around 10%, plunged into a "zero profit" dilemma.

"As early as the beginning of March this year, the China Textile Industry Association conducted a market survey of 6 provinces. It found that 2/3 of textile enterprises had only 0.62% profit margins, and 1/3 of the other companies had 6%-10% profit margins.

In the two quarter, the market situation is even worse, and the pressure of textile companies will further increase. "

The head of China Textile Industry Association said so.

Statistics show that there are more than 80 thousand textile enterprises in the mainland, of which 6.6 are small businesses.

In the first half of this year, news of closure or loss of textile enterprises came one after another.

Faced with such a situation, the industry has written to the state through various channels. It appeals to increase the export tax rebate rate of textiles, so as to ease the profit pressure brought by the appreciation of the renminbi and endow textile enterprises with the capacity of sustainable reproduction.

In July 14th, the Vice Minister of Commerce Gao Hucheng said publicly that it would launch a policy of support at the right time to help textile industries such as those with export problems, and would launch policies at the right time.

Market impact: the two tier market is not obvious.

In the two tier market, the relevant textile and clothing sector has not been greatly boosted by the new deal.

Yesterday, in addition to Chinese clothing, Weixing shares, Shenda shares, Lu Tai A and a few other stocks in the red market, most textile and clothing stocks received green disk.

Market performance is so restrained that industry analysts generally believe that for the textile and garment enterprises with high export dependence, the new deal will help alleviate the pressure of enterprises and improve the profitability of the industry. However, the negative factors that will haune the development of the textile industry will still exist for a certain period of time, and will not be eliminated because of the increase in the export tax rebate rate.

Zhang Bin, a researcher at the state securities company, said that the increase in tax rebate rate of spinning and clothing is beneficial to enhancing exports, which is beneficial to improving export growth, but it is mainly conducive to small and medium enterprises, and has little effect on large and medium-sized enterprises. At present, industry integration is in urgent need of survival of the fittest and elimination of a small capacity.

Second, the increase in tax rebate rate is mainly a one-time income for enterprises, and the net interest rate that will not be completed before the announcement will increase by 2%.

After the announcement, foreign dealers will adjust their prices according to the tax rebate rate, reduce the quoted price, the actual domestic enterprises' income comes from the increase of orders, and at least half of the tax rebate rate will be taken away by foreign businessmen without compensation.

Finally, the upward tax rebate rate will not change the downward trend of the industry's profit growth rate. It will not have a significant impact on the annual earnings of listed companies, nor will it change the trend of the decline in export growth, but only a slowdown in the rate of decline.

Wang Rong, a joint Securities researcher, said that the root cause of the slowdown or decline of export growth still exists: the cost pressure is still increasing, and the pace of RMB appreciation has not slowed down. Even if the export tax rebate rate is raised by two percentage points, it will only help the general trade export enterprises to extend the pition period, and the trend of slowing export growth is hard to reverse.

Experts said that the main contradiction facing the textile and garment industry is still overcapacity due to insufficient external demand.

The callback of the export tax rebate rate can alleviate the difficulties caused by the rising cost in the short term, but whether the export enterprises can survive in the squeezing of profits depends on two aspects: first, the improvement of external demand or the decrease of production cost; two, the breakthrough in adversity and the realization of industrial upgrading by giving full play to each advantage.

At present, most enterprises need to find a way out from the latter.