Lower Taxes, 3% Tax Cuts, Price Reduction Of Pure Polyester Yarn Price?

In March 5th, the opening ceremony of the two session of the thirteen National People's Congress was held in the Great Hall of the people in Beijing. Premier Li made a report on the work of the government, announcing the implementation of a larger scale of tax cuts, reducing both the inclusive tax and the structural tax reduction, focusing on reducing the tax burden on manufacturing and small and micro enterprises, deepening the value-added tax reform, reducing the current 16% tax rate in manufacturing and other industries to 13%, and reducing the current 10% tax rate in pportation, construction and other industries to 9%, so as to ensure a significant reduction in the tax burden on major industries.

Since April 1, 2019, taxpayers' VAT taxable activities have been adjusted to 13% of the original 16% tax rate. The industry has asked whether the market of pure polyester yarn after tax reform will affect the price of pure polyester yarns by reducing taxes.

After adjusting the tax rate, market mainstream prices remained stable, and tax reduction had little effect on the price of pure polyester yarn.

Taking the pure polyester yarn of Fujian area as an example, since the beginning of March, the pure polyester yarn market has remained stable, and the mainstream trading price has been concentrated in 13500-13600. On the one hand, the cost side has not changed much, and the raw material terminal PTA is expected to keep a narrow and warm position in stock. However, due to the large scale production of PX, the price of raw polyester terylene fiber is limited. On the other hand, the downstream demand is not good, and the circulation of goods is slow. In addition, the yarn business of the risk aversion in the off-season is actively shipping. Considering the low inventory, the pure polyester yarn is still stable and stable.

With the advent of April 1st, the value-added tax has been officially lowered, and the value-added tax rate of the textile enterprises has been reduced from 16% to 13%. However, the market reaction is flat, and the market price of pure polyester yarn is still strong.

(unit: yuan / ton)

At the beginning of March, most yarn enterprises increased by 100-200 due to the increase of raw polyester staple fibers and the reemployment of labor costs. However, because of the continuous customer orders, a few enterprises did not adjust their quotations, and the price of polyester and short raw materials reduced the market turnover atmosphere, but the downstream demand was slow. But the inventory of enterprises was low, and the pure polyester yarn was weakly stabilized. In the end, the good factors of PTA maintenance improved the market turnover atmosphere, and the news of the tax cut affected the willingness to replenishment in the downstream. The turnover was slightly improved but not expected.

(unit: yuan / ton)

After the adjustment of value added tax, what is the impact on the market? In the case of Jiangsu's T32S pre tax price of 13000, the value added tax is reduced from 16% to 13%.

Tax reduction is only a tax burden on corporate profits.

Take the T32 pre tax price of 13000, raw materials 8800, guaranteed cost of processing 3500 as an example:

Before tax cuts:

Input tax: (8800+3500) *16%=1968

Output tax: 13000*16%=2080

Value added tax: 2080-1968=112

After tax cuts:

Input tax: (8800+3500) *13%=1599

Output tax: 13000*13%=1690

Value added tax: 1690-1599=91

Before and after tax reduction:

112-91=21

If the input tax is included in the cost of raw materials and the cost of preservation, the pure polyester yarn will be reduced by 21 in the sales link, not by 3% on the basis of the price of polyester yarn 13000, and the sale price of pure polyester yarn will be reduced by 390.

Therefore, from the perspective of pure tax reduction, the price of pure polyester yarn has little effect.

The space for corporate tax reduction depends on the value added rate of the enterprise and the reduction of the upstream corporate tax rather than the direct reduction of 3% of the commodity price.

Moreover, most spinning enterprises have fixed tax burden according to their size and production variety, so the actual value-added tax adjustment has no obvious impact on the pricing of finished products.

(unit: yuan / ton)