Value-added tax transformation on the impact of China's enterprises Discussion
Abstract: The continuing crisis in the global spread of economic and financial backdrop, China on January 1, 2009 implemented by the "production-type VAT" transformation "consumption-type VAT." Value-added
tax reform, a new round of tax reform in our country the most important elements. In introducing the meaning and content value-added tax
transformation on the basis of the value-added tax transformation on the
impact of China's enterprises.
Key words: value-added tax; production-oriented value-added tax;
consumption-based value-added tax; Enterprise
First, value-added tax reform, the meaning of
VAT is a sale of goods, providing processing, repair and repair
services as well as the added value of imported goods to obtain a tax for the tax object. From the tax on the principle that VAT is commodity production, distribution, labor services, multiple links add value, or value-added goods as a turnover tax levied and implement price of foreign tax that is borne by consumers, there is value-added tax only, no non-
value-added tax, but in practice, added value, or value-added goods in the
production and circulation process is very difficult to accurately
calculate. Thus, China also adopt international tax deductions on the widely used approach, namely, sales of goods or services under the sales tax rate required to calculate the amount of output tax, and then deducted to obtain the goods or services of VAT paid , that is, the amount of input tax, the difference is the value-added part of the tax due, this method
embodies the principle of tax according to value-added factor.
In accordance with "input tax" deduction method VAT can be divided
into two types: One is only allowed to buy the raw materials contained in the deduction of taxes, does not allow tax deductions contained in the outsourcing of fixed assets; 2 is all outsourced projects including raw materials, fixed assets, including, contained in the tax deductions are allowed. The former usually referred to as "production-type VAT", the
latter referred to as "consumption-based value-added tax", China in 2009
prior to the implementation of the "production-type VAT." The so-called
value-added tax transformation is to produce value-added tax to
consumption-based value-added tax.
2, 2009 the main elements of value-added tax transformation
The value-added tax reform of the program's main elements are: from
January 1, 2009 onwards, in the maintenance of the current value-added tax
rates remain unchanged under the premise, allowing nationwide (regardless of region and industry), all value-added tax general taxpayer deductions
contained in its newly purchased equipment, the amount of input tax not
offset the amount carried forward end of the input tax deduction next issue to continue. To prevent the emergence of tax loopholes, has nothing to do with the enterprise technology updates, easy mixing of applicants
for personal consumption, consumption tax, cars, motorcycles and boats out of the scope of the above equipment. At the same time, as the reform of complementary measures to the corresponding value-added tax exemptions for
imported equipment cancellation policy and foreign-invested enterprises
purchase domestic equipment value-added tax rebate policy, small-scale
taxpayers, the rate will be lowered to 3% of unity will be restored mineral value-added tax rate to 17 %. The value-added tax reform plan the
biggest bright spot is the full deduction, industry-wide restructuring,
cancel incremental restrictions. The estimates, in 2009 the year the implementation of the reforms will reduce the value-added tax revenue of
approximately 1 200 billion, urban maintenance and construction tax
revenues by about 60 billion surcharge for education revenue of approximately 3.6 billion, an increase of about 6.3 billion income tax increase will be offset reduce the corporate tax burden of about 1 23.3 billion.
Third, value-added tax transformation on the impact of China's enterprises
(A) reduce fixed costs and reduce the tax burden on businesses
China's production of statutory value-added tax rate of 17%,
converted into consumption-type VAT rate of 23%, this rate is higher than
average level of western countries, corporate taxes are obviously over. On the one hand, consumption-type VAT allows businesses a one-off fixed
assets contained in the full amount of the tax, that is, the means of production outsourcing vendors, not into the product added value, but only on the consumption tax, thereby reducing investment costs while boosting corporate profits. For the same enterprise, the actual tax burden of production-type VAT is greater than consumption-type VAT tax. On the other
hand, the production-based value-added tax billing units must pay taxes,
and even, according to the implementation of value-added tax rules,
delivery must pay taxes. In other words, units had not received payment of the taxes on the first Dianjiao. From a national perspective, about an average of three months in order to receive payment. 00 billion yuan every year VAT rate of 8, in March period, 4 percent per annum terms, producers will bear the 8 billion of financial costs (interest). We all know, there
are always part of the purchase price can never be recovered (bad debts, storage and transportation losses, obsolescence, etc.), according to official statistics, the country has reached 3300 billion yuan. If the estimated annual 50 billion yuan more than in vain enterprises paid about 85 billion in value-added tax. Value-added tax, after more than two years
of national business will be tax cuts of about 20 billion yuan.
(B) The enterprise set of accounts and accounting changes
The implementation of wide range of enterprise value-added tax should
be in the "tax payable" subject, under the introduction of "value-added
tax of fixed assets should be offset," details subjects, and subjects in the details set up under the "fixed amount of input tax", "switch the amount of input tax of fixed assets out "," has offset the amount of fixed input tax "and other columns. The implementation of wide range of enterprise value-added tax should be in the "due taxes and fees - payable
value-added tax," added under the heading "New value-added tax offset the
amount of input tax the amount of fixed assets" column, used to record the enterprises to the year the amount of new value-added tax offset the
amount of input tax of fixed assets.
Restructuring of enterprises focused on the impact of accounting change in accounting policy, the main measurement methods, including machinery and equipment, value-added payment method and depreciation
policy. But the value-added tax transformation on the impact of accounting
for far more than that. Such as the transformed value-added tax and income
tax due to the existence of counter-balance the relationship between the
offset due to the VAT included in the scope of the recorded value of fixed
assets and therefore change, thus affecting the amount of depreciation of the asset in the future, thereby affecting the phases of the costs, operating results, as well as the amount of income tax accounting and payment, but also changes in the amount of value-added tax will also
affect the enterprise's cash flow, financial position and the time value of money and so on. Reposted elsewhere in the paper for free download http://
(C) the impact of the financial statements of the enterprise
1. For the impact of the balance sheet
Transformation before and after comparison of balance sheet items, fixed assets of enterprises as an important asset, and therefore its value changes on the internal structure of the total assets of businesses will
have some effect, and cause-related projects within the balance sheet
changes. Such as the original price of fixed assets, accumulated depreciation and net fixed assets and so on.
2. For the impact of corporate income statement
(1) Direct impact: investment in the year, the new one-time full-
deductible VAT on fixed assets, resulting in a substantial increase in profits that year, but the profits of subsequent years are no longer affected by the VAT.
(2) indirect effects: Investment those days, because consumption-
based value-added tax on investment, a larger stimulus intensity, so operating income may be increased, but the increase in fixed assets depreciation charges led to an increase, the financial costs may be due to the increase in loans rise thus offset the VAT due in part to offset the benefits brought about by increased profits. While the profits of subsequent years depends mainly on the new status of the return on investment in fixed assets and depreciation and financial costs of the
relationship between the long payback period for the project, its profits in the investment does not necessarily increase in the early years.
3. For the impact of the cash flow statement
(1) a direct impact on: Investment That year, cash flow from
operations due to the substantial reduction in value-added tax paid has
increased, but the subsequent years the cash flow is no longer subject to the direct impact of value-added tax.
(2) indirect effects: Investment That year, cash flow from operations
offset the impact of VAT in addition by the sharp rise, but also may be due to additional fixed assets, net operating cash flow into the role of Er Shi has increased, but the year of investment-cash expenses will
normally be higher than the other two kinds of value-added tax, financing
and cash flow of interest payments will be increased. Subsequent changes in cash flow each year, depending on the increase in new fixed assets on the role of cash flow from operations and debt repayment and interest
payments incurred by the difference between cash flow financing.
(Iv) the impact of business investment
In the value-added tax transformation process, the business
investment in equipment will undergo significant changes:
1. Businesses and supporting investment in equipment investment will increase significantly. Because the amount of input tax to offset the impact of corporate cash flow, so that enterprises can bring input tax on investment tend to offset the amount of investment in equipment. In
addition, the transformation reduces the return on investment in equipment requirements, business investment in equipment will have a greater likelihood of program through feasibility analysis.
2. Business investment cycle will be shortened significantly. The
state has adopted a number of encouraging enterprises to carry out technical transformation, the updated policy, the state introduced the policy to the enterprise technical progress in transition, provided a more favorable conditions. In this way, business equipment, technology updates will bring about the acceleration of the natural cycle of enterprises to invest in shortening.
3. Enterprises to invest in activities that would take the initiative to follow national policy. For example, the business investment in the direction of national policy implementation process will be based on. However, the company will make some manipulation, such as corporate investment in time will be interested in the election after the beginning
of the transition. Transformation of these actions will impact the implementation of policies, and even affect the policy transition effects.
(V) the impact of corporate financing
Value-added tax will indirectly increase corporate financing.
Increasing the scale of enterprise investment is bound to stimulate business financing. A huge capital investment in equipment required for the enterprise apart from the use of existing accumulation and internal financing for investment, in general, need by issuing new shares, bank loans, issuing bonds and other external funding in order to raise the funds needed for investment in equipment.
(Vi) the impact of the competitiveness of enterprises
Key financial indicators in enterprises, tax restructuring to
increase business investment could make the relevant financial indicators have worsened in the year, such as asset-liability ratio and so on, but in
future years, with the investment results of the gradual manifestation of
the financial indicators may be better, and give enterprises a competitive advantage. Competitiveness in the market, tax restructuring enable enterprises to increase investment in equipment to speed up the renewal of equipment, production increased scale and operating types, etc., which are
likely to lead company's products quality, quantity increase, combined with lower production costs, making the enterprise market competitiveness enhanced to improve sales and ultimately increased profits.
(Vii) the impact of the enterprise distribution
Although there may be increased investment in business revenue and profit increases, but at the same time led to a reduction of enterprise self-accumulation. The actual distribution of profits and the corporate
limits, depending on the cash flow position. Investment that year, due to restructuring will reduce the amount of corporate tax, thereby reducing the cash outflow. But the transformation to stimulate enterprises to increase investment, increase cash outflows, offset by the net after the company's total cash flow but will actually decrease. Therefore, the enterprises will not increase due to restructuring of corporate profit distribution. After the investment of the year, as companies continued to
receive the return on investment, the enterprise's cash flow position will be substantially improved, this time the distribution of profits of
enterprises will increase.
Value-added tax transformation of the global financial crisis, the
world economic downturn, background, on China's economic and social impact is essential, but also the history of China's largest single tax once the reform of tax cuts. The financial crisis is on the real economy have a significant adverse impact, in this situation, the timely introduction of value-added tax reform, to enhance the capacity for sustained development, improve enterprise competitiveness and risk-resisting ability, to overcome
the international financial crisis on the adverse impact of China's
economy has an important role. In the long run, the implementation of value-added tax reform, enterprise will have a greater enthusiasm for investment in machinery and equipment and other fixed assets so as to enhance the competitiveness of products, which will be more conducive to long-term development of enterprises. Therefore, China's value-added tax
reform on China's macro-economy will have a positive effect.
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