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The State Administration Of Taxation Has Revealed That A New Round Of Tax Cuts Should Be Pushed Forward.
- Dec 04, 2018 -

In order to reduce the tax burden of enterprises on a larger scale, the central level has recently released large-scale tax and fee reduction signals frequently.

At a recent meeting of the Steering Committee of the Tax Collection and Administration Forum (FTA) held by the Organization for Economic Cooperation and Development (OECD) in Paris, France, Wang Jun, Director-General of the State Administration of Taxation of China, said that tax reduction is a clear orientation of China's tax reform in recent years, especially since this year. At present, China is studying and launching a new round of larger-scale, substantive and inclusive tax reduction measures, including promoting substantial tax reduction such as value-added tax, and implementing inclusive tax exemption for small and micro enterprises and technology-based start-ups, in order to better promote the high-quality development of China's economy and better contribute to the development of the world economy.

Value Added Tax Emphasizes Substantive Tax Reduction

Tax cuts of 1.3 trillion yuan are expected for the whole year, and next year will be a trillion yuan, based on the "larger scale" requirement disclosed by the State Administration of Taxation. Among them, the main force of tax reduction will still be VAT reduction. The State Council has made clear the direction of reducing the value-added tax rate from three to two, and further lowered the value-added tax rate.

Value-added tax (VAT) is the largest tax in China, with revenue of 5.3 trillion yuan in the first 10 months of this year, accounting for about 37% of the total tax revenue in the same period. At present, the VAT tax rate is 6%, 10% and 16%. A reduction of one point will generally result in a reduction of 100 billion yuan.

Ni Hongri, a researcher at the Development Research Center of the State Council, told First Financial Journalist that under the complex international and domestic environment, the pressure of enterprise transformation is high. The tax system of VAT itself is standardized. After the merger of the Gold Tax Phase III Project and the Local Tax Bureau of the State Tax Administration, the ability and efficiency of tax collection and management have been improved significantly. The nominal tax rate and the actual tax burden of VAT of enterprises are gradually approaching. If the tax rate is not reduced, the tax burden of enterprises will be objectively increased. In fact, the strengthening of levy and management also provides space for reducing nominal tax rate.

Many finance and taxation experts told the first financial journalist that reducing VAT tax rate is very complicated under three and two levels, not only considering the financial affordability, but also considering the impact of tax rate changes on many industries and enterprises, so there are at least dozens of schemes derived. The basic tax rate of 16% is likely to be reduced by one or two percentage points, and industries with different tax rates will also be adjusted.

Reducing VAT tax burden is not only an option to reduce tax rate, but also the establishment of VAT withholding and refund system will become the focus.

Our country used to implement the value-added tax withholding tax without refund, that is, when the current tax on the taxpayer's offset is insufficient to compensate for its income tax, the difference is called withholding tax, which is not refunded in the current period and carried over to the next period. This occupies the enterprise funds and increases the cost of enterprise funds.

The value-added tax withholds more than 1 trillion yuan. This year, China will refund the amount of income tax withheld from advanced manufacturing industries such as equipment manufacturing, R&D and other modern service industries, eligible enterprises and power grid enterprises in one lump sum. According to the data of the General Administration of Taxation, by the end of September 2018, the actual tax rebate had reached 114.85 billion yuan, effectively alleviating the financial pressure of enterprises and lightening the burden of enterprises.

Many financial and taxation experts suggest that the next step is to expand the scope of VAT withholding and refunding, improve the operation process and establish a VAT withholding and refunding system. In addition, we should clear up the existing preferential policies and open up the chain of VAT deduction.

Inclusive tax exemption

Inclusive tax exemptions are targeted at small and micro enterprises and technology-based start-ups. These enterprises are huge in number, and they are huge receptacles for China's employment. They are related to the vitality and prosperity of China's economy.

At present, preferential tax exemptions for small and micro enterprises and technology-based start-ups mainly focus on value-added tax and enterprise income tax.

For example, the current policy exempts small-scale taxpayers from VAT from VAT of 20,000 yuan to 30,000 yuan in monthly sales of small and micro enterprises. For small and micro enterprises whose annual taxable income is less than 1 million yuan, the enterprise income tax is actually levied at the 10% tax rate.

In order to support the development of start-up technology enterprises, this year the fiscal and taxation departments issued policies to direct investment in the seed stage and start-up technology enterprises by equity investment in the company-based venture capital enterprises for two years, and the tax payable Office of the company-based venture capital enterprises can be deducted according to 70% of the investment in the year when the equity holds for two years. Get the forehead.

Shi Zhengwen, director of the Research Center of Finance and Taxation Law of China University of Political Science and Law, believes that this time, it is clear that preferential tax exemption can be implemented for small and micro enterprises and technology-based start-ups, which means that the value-added tax exemption standard for small and micro enterprises will be further improved. In the future, small and micro enterprises will be exempted from corporate income tax.

Shi Zhengwen told First Financial Journalist that the possibility of introducing a large-scale tax reduction policy at the end of this year is not very likely, and may continue to introduce some small-scale tax reduction policies.

With the gradual clarification of the special additional deduction policy for personal income tax, the scale of tax reduction will be larger next year. According to the data of the General Administration of Taxation, in the first month of the implementation of the tax reform (October), the national personal income tax was reduced by 31.6 billion yuan, and more than 60 million taxpayers before the tax reform no longer paid personal income tax on salaries and salaries.

In addition to tax cuts, next year's fee reduction policy will focus on the reduction of social security premium rates. The State Council has made it clear that we should study and put forward a plan to reduce the social security premium rate, and implement it in synchronization with the system reform of tax collecting social security in an all-round way.

China Social Security magazine, which is in charge of the Ministry of Human and Social Affairs, quoted experts as saying that at present, the cumulative balance of pensions in China is large, which can ensure timely and full payment, implement the central adjustment system of basic pension funds, change social insurance premiums to tax collection, study and determine a standardized and reasonable base of social insurance premiums, and enhance social insurance contributions. After the compliance of the fee base, the actual social security premium rate can be reduced by 5 percentage points.