The Epidemic Caused The Two-Way Extrusion Of Processing Trade Enterprises, And The Preferential Tax Policy Of "Export To Domestic Sales" Came.

In April 15th, the Ministry of Finance issued a notice to decide that from April 15, 2020 until December 31, 2020, the interest on tax reduction and tax payment of domestic sales tax for processing trade enterprises will be temporarily exempted. On the same day, the Ministry of finance, the General Administration of customs and the State Administration of Taxation jointly issued a notice. Since April 15, 2020, it has decided to extend the selective tariff policy for domestic sales under the Circular of the Ministry of Finance and the General Administration of Taxation of the State Administration of Taxation on the selective tariff policy for domestic sales, and extend it to all comprehensive bonded areas.

These two policies are also the concrete implementation of a number of initiatives proposed by the Executive Council of the State Council in April 7th to coordinate the development of domestic and foreign trade, support processing trade enterprises to alleviate difficulties, and promote stable foreign investment and steady employment.

According to the introduction, when processing trade enterprises sell bonded imported materials or finished products, they also need to pay interest on tax deduction in addition to paying the import tax in accordance with the regulations. Temporarily exempt from tax interest on tax on domestic sales of processing trade enterprises from April 15th to the end of this year can reduce the cost of domestic sales and ease the pressure of enterprise funds.

At the same time, when processing trade enterprises apply for domestic sales within the special supervision areas of customs, they must pay the value-added tax and consumption tax according to the regulations. Import tariffs can be paid on the basis of imported materials or finished products. With this policy, enterprises can reduce their tax burden independently and rationally. At present, this policy has been implemented in 40 customs special supervision areas in the country, 24 of which are comprehensive bonded zones, and the pilot expanded to 113 comprehensive bonded zones nationwide, and more enterprises will benefit from it.

It is understood that processing trade accounts for 1/4 of China's foreign trade. Compared with the general mode of trade, processing trade has the characteristics of "two out of bounds", and it is an effective form of open economy and international industrial cooperation. Over the past 40 years since the reform and opening up, China's processing trade has achieved leaping development. It has made important contributions to promoting employment, boosting trade power and upgrading the industrial structure.

In recent years, domestic and foreign environment has undergone profound changes, and the scale and proportion of processing trade also declined. The proportion of foreign trade accounted for 53.4% from the highest in 1998 to 25.2% at the end of last year. At the same time, the transformation and upgrading of processing trade and the gradient transfer work also achieved positive results. In 2019, the proportion of processing trade in the central and western parts of the country accounted for 7.8 of the total processing trade, which was 23.3% percentage points higher than that in 2015.

According to the insiders, the current outbreak of the new crown pneumonia is seriously affecting the world economy. Unstable and uncertain factors are increasing. Processing trade is affected more rapidly and directly by the epidemic. Facing the "two-way extrusion" of demand side and supply side, more measures are needed to relieve the difficulties of processing trade enterprises.