Analysis Of Anhui Cotton Spinning "High Levy And Low Deduction" Reform

The current policy is "high levy and low deduction".

For agricultural products processing enterprises (in this paper, for cotton textile enterprises), value-added tax is the main tax category of agricultural products processing enterprises, accounting for more than 50% of taxes and fees paid by enterprises.

At present,

The current policy of weaving enterprises is the Provisional Regulations on value added tax of People's Republic of China promulgated in 1993.

The deduction of input tax is a major feature of value added tax. In view of the sixteenth provision of the Ordinance, the agricultural products sold by agricultural producers are exempt from value-added tax. Since the processing enterprises can not obtain VAT invoices when purchasing their own farm produce from the processing enterprises, the eighth entry of the 1993 regulations provides that the amount of tax deductible for the purchase of tax-free agricultural products is calculated according to the deduction rate of the purchase price of 13%.

The value-added tax of agricultural products processing enterprises is paid at 17% tax rate, while the purchase of agricultural products can only be deducted according to the 13% calculation, which results in a "high tax and low deduction", which has become a relatively strong tax issue for enterprises over the past 20 years.

Cotton is one of the main raw materials used in production and processing of cotton weaving and weaving enterprises. Therefore, the "high tax and low deduction" of value-added tax has great influence on the cotton textile enterprises.

According to the current policy, the input tax rate of cotton textile enterprises when purchasing cotton is 13%, and the duty rate of yarn products is 17%. This means that even if cotton textile enterprises fail to realize the value added, they will sell the cotton purchased at the original price and pay the same tax. The value-added tax will be "high and low deducted", especially in the past two years, when the cotton price is high in China, the tax pressure of the enterprises is very large.

Taking a cotton textile enterprise with an annual cotton consumption of 20 thousand tons as an example, 1 tons of raw cotton are calculated at an average purchase price of 20 thousand yuan (including tax). The total annual purchase cost of cotton is about 400 million yuan, and the input tax is 46 million 10 thousand yuan at 13% tax rate. If the tax rate is 58 million 120 thousand yuan at 17% tax rate, the price difference will be 12 million 110 thousand yuan. Because the corresponding local tax categories such as urban construction tax and additional tax on the basis of turnover tax should be increased by about 1 million 570 thousand yuan, which is obviously a small cost for enterprises belonging to the small profit industry, which greatly increases the production cost of enterprises.

Three approved methods for the new trial policy

Since February 2014, the provincial cotton textile enterprises have implemented the new value-added tax deduction policy according to the announcement of the Anhui Provincial Finance Department of the Anhui Provincial State Taxation Bureau on the issue of the pilot project to increase the approved tax deduction for value-added tax of agricultural products.

The new deal stipulates that since February 1, 2014, the general taxpayer who produces and sells lint and cotton yarn with the purchase of agricultural products shall be included in the pilot scale of approved value-added tax deduction for agricultural products.

In view of the relevant analysis of cotton products used in cotton textile industry and cotton processing products, the new regulations of Anhui stipulate that according to the "input output method", "cost method", "reference method" and other related provisions, the cotton value-added tax input tax is approved.

In addition, according to the deduction standard (cotton unit consumption quantity), lint (per ton) is calculated according to the 2.7 unit seed cotton consumption per unit quantity; combed cotton yarn (per ton) is calculated according to the amount of 1.4 ton lint per unit consumption; the combed cotton yarn (per ton) is calculated according to the 1.1 tons of lint consumption.

Moreover, it is stipulated that the VAT input tax shall not be deducted from the VAT withholding tax certificate, and the value-added tax input tax shall be deducted in accordance with the relevant provisions in addition to the purchase of goods other than agricultural products, taxable services and taxable services. The purchase of direct sales of cotton shall be deducted from the added value tax of cotton according to the following methods: the current amount of cotton VAT input tax is allowed to be deducted during the current period: the amount of cotton sold in the current period is (1- loss rate) * cotton average unit price x 13%/ (1+13%).

Comparative analysis of new and old policies and the impact of three approved methods

The newly approved method of deducting the VAT input tax in Anhui province has received great attention from the managers of cotton textile enterprises. Textile enterprises have compared and analyzed the relevant methods of the present administration and the new deal.

Contrast 1: input output method.

In the actual production, in order to achieve variety differentiation, enterprises will produce various kinds of yarn products, such as combed yarn, semi combed yarn, combed yarn, high carding yarn and blended yarn, which are commonly produced by enterprises. There will be differences in individual consumption among different varieties, while different types of products of the same type have different individual consumption due to different factors such as quality difference of raw materials, management level, production equipment difference and process difference.

The new deal is based on the input-output method, so what's the impact on enterprises?

Example: in Anhui

Next, the unit consumption per ton of pure cotton combed yarn and combed yarn is calculated by 1.1 tons and 1.4 tons respectively, and the following is calculated with the single yarn production A enterprise as an example.

For example, in 2013, the A company produced 30 cotton combed yarn and 60 pure cotton combed yarn each 4000 tons, the two products were sold out, and the actual consumption per unit consumption of the two products was close to the approved unit consumption.

According to the calculation, the input tax for the current administration is 9 million 370 thousand yuan and 19 million 970 thousand yuan respectively. In the Anhui provincial notice, the input tax method of the new deal in the announcement of the new deal in 2013 is 1182 yuan and 25 million 220 thousand yuan respectively, which can be deducted from the two products in A enterprises (see table below).

Output comparison calculation of production and production

Analysis: the comparison between the present value-added tax method and the input output method of the new deal shows that the input tax of the two categories of products under the new deal increased by 2 million 460 thousand yuan and 5 million 250 thousand yuan respectively after the increase of the tax rate to 17%, which increased the input tax deduction amount of the cotton textile enterprises to a certain extent, and reduced the tax burden of the enterprises.

Contrast 2: the input tax is pferred out.

Since the new policy does not specify the specific deduction method for self produced cotton yarn, let's take a single yarn production B enterprise as an example.

For example, the value added tax payable by B enterprises in 2013 was 7 million 20 thousand yuan, the cost of cotton in stock at the beginning of the year was 17 million 260 thousand yuan, the cost of yarn was 98 million 720 thousand yuan, and the semi-finished product was 4 million 740 thousand yuan.

According to the relevant provisions of the new deal in the Anhui provincial notice, it is necessary to pfer the cotton value-added tax input tax for cotton stocks, yarn and semi finished products at the beginning of the year.

In this case, the added value of the current increment is 6 million 920 thousand yuan (see table below).

The added value tax of cotton value-added tax shall be pferred.

Analysis: in view of the new policy implementation, the more material reserves, or the more semi-finished products and finished products, the greater the financial pressure will be.

In the new policy, the pfer process has an impact on the initial tax amount of the initial inventory in the initial period of the implementation of the new deal, but the enterprise will no longer involve the pfer treatment when the enterprises turn out all the initial stocks.

The Announcement No. eleventh of Anhui Province in 2013 stipulates that the pilot taxpayers shall pay taxes in accordance with the relevant provisions of the ninth implementing measures and form a taxable payment. If there is any difficulty in the payment of a one-time payment, the tax amount should be pferred out of the tax amount before December 31, 2014.

Contrast 3: cost method.

The new policy of Anhui has not yet touched upon the "cost law". Some enterprises have reflected that the cost method is more equitable than the input-output method to deduct the input tax of high count yarn products.

However, most enterprises reflect the fact that the "cost method" is difficult to operate in practice. The difference between the financial accounting caliber and the accounting system is relatively large. The difference between the standard of deduction of the same type and the same industry is different, which easily leads to differences and affects the implementation of the approved method of agricultural product deduction.

Insiders said that due to the complexity and difficulty of the "cost method" accounting process and the high level of professional level of financial personnel, the effectiveness of the "cost method" should be further verified.

The new policy reform suggests that the "see through deduction" procedure is simpler.

Under the new deal, the implementation of the approved pilot deduction scheme for value-added tax of agricultural products has made the cotton textile industry see the hope of reform.

The head of a pilot enterprise in Anhui indicated that through the analysis of the new deal approval method, there are still some areas to be explored for the implementation of the new approved pilot deduction scheme for the value-added tax of agricultural products.

For example, in the new deal, it is stipulated that the value-added tax input tax of the inventory products in production should be pferred out. For textile enterprises with a certain amount of raw cotton reserves, finished goods inventory and semi-finished products, the value-added tax will not be realized if the income is not realized. The practice will increase the financial pressure of the textile enterprises, which will improve after a period of time.

In addition, in the new deal of Anhui, the calculation of the value added tax payable in the current period is based on the principle of the ratio between sales and income. The input tax corresponding to the inventory of agricultural products or finished products is no longer involved in the deduction of the current input tax. Before the implementation of the deduction method, the input tax of raw materials at the end of the final inventory can flexibly adjust the current value added tax burden - certification or non certification.

After the implementation of the approved method, the cotton wool consumption tax on cotton lint can only be calculated and deducted after the sale of cotton yarn, resulting in the pressure of funds.

In recent two years, domestic cotton textile enterprises have opened up new customers by upgrading and producing high count yarn and combed yarn in order to reduce the difference between inside and outside cotton prices. The cost of enterprises that are higher than the stipulated level of consumption per unit will also increase, and the whole industry level will be restrained by a fixed consumption cost framework. To a certain extent, the development of textile enterprises will be restricted. In addition, for spinning and weaving enterprises, the value-added tax input tax for the consumption of agricultural products will be more difficult to be approved according to the pilot policy because of the increased production link of self produced cotton yarn to grey cloth.

In this regard, the head of a textile enterprise in Anhui suggested that the new policy should first implement the "sight deduction", that is, to abolish the low tax rate of value-added tax on agricultural products, and to adjust the applicable tax rate of value-added tax on cotton and other agricultural products to 17%, which can simplify the corresponding procedures, reduce the pressure of enterprise funds and avoid falsification. Secondly, if we continue to adopt the trial method, we hope to improve the approved rules (for example, the approved method for spinning and weaving joint enterprises), at the same time, simplify the calculation process, and bring the spinning and weaving weaving enterprises into the pilot area as soon as possible. Finally, we should clarify the annual liquidation rules, and the tax authorities at the provincial level and above should publish the supporting documents as soon as possible, so that the tax authorities at the provincial level and above should publish the supporting documents as soon as possible, which will help enterprises avoid tax risks.