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

　 Current policy of "high levy and low deduction"

For agricultural product processing enterprises (cotton textile enterprises involved in this article), VAT is the main tax borne by agricultural product processing enterprises, accounting for More than 50%. At present, cotton spinning The current policy of weaving enterprises is the Provisional Regulations of the People's Republic of China on Value Added Tax issued in 1993.

"Input tax deduction" is a major feature of VAT. Whereas Article 16 of the Regulations stipulates that self-produced agricultural products sold by agricultural producers are exempt from VAT, processing enterprises cannot obtain VAT invoices when purchasing self-produced agricultural products from farmers one thousand nine hundred and ninety-three Article 8 of the Regulations stipulates that the input tax allowed to be deducted for the purchase of duty-free agricultural products shall be calculated at a deduction rate of 13% of the purchase price. The value-added tax of agricultural product processing enterprises is paid at the rate of 17%, while the deduction amount of agricultural products purchased can only be calculated at the rate of 13%. Thus, "high taxes and low deductions" have emerged, which has become a strong tax problem reflected by enterprises over the past 20 years.

Cotton is one of the main raw materials used by cotton textile enterprises in production and processing, so the "high levy and low deduction" of VAT has a great impact on cotton textile enterprises. According to the current policy, the input tax rate of cotton textile enterprises when purchasing cotton is 13%, and the output tax rate of yarn products is 17%, which means that even if the cotton textile enterprises do not realize value added, they will also have to pay taxes if they sell the purchased cotton at the original price, and the VAT paid will result in "high levy and low deduction". Especially in the recent two years when China's cotton prices are high, the enterprise tax pressure is very great.

Taking a cotton textile enterprise with an annual cotton consumption of 20000 tons as an example, if the average purchase price of one ton of raw cotton is 20000 yuan (tax included), the total cotton purchase cost for the whole year is about 400 million yuan, and the input tax calculated at the tax rate of 13% is 46.01 million yuan. If the input tax calculated at the tax rate of 17% is 58.12 million yuan, the tax rate difference is 12.11 million yuan, As the corresponding urban construction tax and surcharges based on turnover tax will increase by about 1.57 million yuan, this is obviously a large expense for enterprises in low profit industries, which greatly increases the production costs of enterprises.

　 Three verification methods for new trial policies

　　 Anhui Since February 2014, provincial cotton textile enterprises have implemented new VAT deduction policies in accordance with the provisions of the Announcement of Anhui Provincial Office of Finance, SAT, Anhui Province on Issues Related to Expanding the Pilot Program of Verified Deduction of VAT Input Tax on Agricultural Products. According to the new policy, from February 1, 2014, general taxpayers who purchase agricultural products as raw materials to produce and sell lint and cotton yarn will be included in the approved deduction pilot range of agricultural value-added tax input tax.

Based on the relevant analysis of agricultural products used in the cotton textile industry, namely cotton, and processed cotton yarn, Anhui's new policy stipulates that the cotton VAT input tax amount shall be verified in accordance with the "input-output method", "cost method", "reference method" and other relevant provisions.

In addition, the deduction standard (unit consumption of cotton) stipulates that the lint (per ton) is calculated by the unit consumption of 2.7 tons of seed cotton; Combed cotton yarn (per ton) is calculated based on the unit consumption of 1.4 tons of lint; The carding cotton yarn (per ton) is calculated as per the unit consumption of 1.1 tons of lint. It is stipulated that the VAT input tax will no longer be deducted by the VAT deduction certificate; For the purchase of goods, taxable services and taxable services other than agricultural products, the input VAT shall still be deducted according to the current relevant regulations; If the purchased cotton is sold directly, the value-added input tax of cotton shall be verified and deducted according to the following methods, and the allowable cotton value-added input tax deducted in the current period=the quantity of cotton sold in the current period × (1 - loss rate) × the average unit price of cotton × 13%/(1+13%).

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

The newly tried verified deduction method of VAT input tax in Anhui Province has received great attention from cotton textile enterprise operators, and textile enterprises have compared the current policy with the relevant methods of the new policy.

Contrast 1: Input output method. In actual production, in order to achieve variety differentiation, enterprises will produce various yarn count products, such as combed yarn, semi combed yarn, ordinary combed yarn, high profile ordinary combed yarn and blended yarn, which are frequently produced by enterprises. There will be differences in unit consumption between different varieties. In products of the same type and number, different enterprises will have differences in raw material quality, management level, production equipment Different process flow and other factors will also produce different unit consumption. The new policy takes the input-output method as the tax basis, so what impact will it have on enterprises?

Example: in Anhui new policy Below, the unit consumption of each ton of pure cotton combed yarn and combed yarn is calculated by 1.1 tons and 1.4 tons respectively. The following is an example of single yarn production enterprise A. For example, in 2013, Enterprise A produced 4000 tons of 30 pure cotton combed yarns and 4000 tons of 60 pure cotton combed yarns, and the two products were sold completely, and the actual unit consumption of the two products was close to the approved unit consumption. According to the calculation, the input tax deducted by the current policy is 9.37 million yuan and 1.97 million yuan respectively. Based on the input-output method of the new policy announced by Anhui Province, the input tax deductible by Enterprise A for these two products in 2013 was 11.82 million yuan and 25.22 million yuan respectively (see the table below).

　 Comparison and calculation of input and output

Analysis: Comparing the current VAT method with the input output method of the new policy, after the input tax rate was increased to 17%, the input tax of the two types of products under the new policy increased by 2.46 million yuan and 5.25 million yuan respectively, which to some extent increased the input tax deduction of cotton textile enterprises and reduced the tax burden of enterprises.

Comparison 2: The input tax is transferred out. Since the new policy does not specify the specific deduction method for self-produced and self used cotton yarn, we will take a single yarn production enterprise B as an example.

For example, in 2013, enterprise B realized the payable VAT of 7.02 million yuan, the cost of cotton inventory at the beginning of the period was 17.26 million yuan, the cost of yarn was 98.72 million yuan, and the cost of semi-finished products was 4.74 million yuan. According to the relevant provisions of the new policy in the announcement of Anhui Province, the cotton VAT input tax on cotton, yarn and semi-finished products consumed at the beginning of the period should be transferred out. For this item alone, the value-added tax increased in the current period was 6.92 million yuan (see the table below).

　　 Treat cotton VAT input tax as transfer out amount

Analysis: In view of the fact that the more raw material reserves, or the more semi-finished and finished products, the greater the capital pressure of enterprises will be. In the new policy measures, the transfer out treatment method has an impact on the enterprise's input tax amount of the beginning inventory at the beginning of the implementation of the new policy. However, when the enterprise transfers all the input tax amount of the beginning inventory, the enterprise will no longer involve the transfer out treatment method. Anhui Provincial Announcement No. 11 in 2013 stipulates that the pilot taxpayers shall transfer out the input tax in accordance with the relevant provisions of Article 9 of the Implementation Measures to form the tax payable. If it is really difficult to pay the input tax in a lump sum, they can transfer out the input tax payable by stages before December 31, 2014. In this way, one year after the implementation of the new policy, this situation will change.

Comparison 3: Cost method. Anhui's new policy has not yet involved the "cost method". Some enterprises report that the cost method is more equitable than the "input-output method" in the deduction of input tax on high count yarn products. However, most enterprises reflect that the "cost method" is difficult to operate in practice. The financial accounting caliber and accounting system of enterprises are quite different. The deduction standards calculated by enterprises of the same type and industry are different, which is likely to cause differences and affect the implementation of the approved deduction method for agricultural products.

Industry insiders said that due to the complexity and difficulty of the "cost method" accounting process and the high requirements for the professional level of enterprise financial personnel, the actual deduction effect of the "cost method" still needs further verification and demonstration.

　 New policy reform suggests that the procedure of "deduction at sight" is simpler

The pilot implementation method for the verification and deduction of input VAT on agricultural products under the new policy has shown the cotton textile industry the hope of reform. The person in charge of a pilot enterprise in Anhui said that through the analysis of the new policy verification method, the new agricultural value-added tax input tax verification and deduction pilot implementation method still has some areas to be studied and discussed. For example, the new policy stipulates that the transfer out of VAT input tax on inventory products in production will cause textile enterprises that have a certain amount of raw cotton reserves, finished goods inventory, and semi-finished products to pay VAT in advance without realizing income. This practice will increase the financial pressure on textile enterprises, which will improve in a period of time. In addition, the calculation of VAT payable in the current period in Anhui's new policy uses the principle of matching output and input. The input tax corresponding to the agricultural products or finished products in the inventory of enterprises will no longer participate in the deduction of input tax in the current period. Before the implementation of the approved deduction method, the input tax on ending inventory raw materials can flexibly adjust the current VAT tax burden - certified or non certified. After the implementation of the verification method, the input tax of cotton lint consumed by cotton yarn can only be calculated and deducted after the sales of cotton yarn, resulting in capital occupation.

In the past two years, in order to reduce the impact of the difference between internal and external cotton prices, many domestic cotton textile enterprises have created new customers by transforming and upgrading the production of medium and high count yarns and combed yarns. The cost of enterprises that are higher than the specified unit consumption level will also increase. To a certain extent, the development of textile enterprises will be restricted by using a fixed unit consumption framework to restrict the level of the entire industry; In addition, for spinning and weaving joint enterprises, due to the increase of production links from self-produced cotton yarn to grey cloth, it is more difficult to verify the deductible input VAT tax of agricultural products consumed according to pilot policies, and the process of gradual improvement and policy strength need to be strengthened.

In this regard, the person in charge of a textile enterprise in Anhui suggested that the new policy should first implement "deduction on demand", that is, cancel the low tax rate of agricultural value-added tax, and adjust the applicable tax rate of agricultural value-added tax such as cotton to 17%, which can simplify the corresponding procedures, reduce the financial pressure of enterprises, and avoid fraud; Secondly, if we continue to use the trial method, we hope to improve the verification rules (such as the verification method for spinning and weaving joint enterprises), simplify the calculation process, and bring spinning and weaving joint enterprises into the pilot scope as soon as possible; Finally, clarify the annual liquidation rules, and the provincial and above tax authorities should issue supporting documents as soon as possible to help enterprises avoid tax related risks.