The legislative details of the country's largest tax category have been disclosed! What is the future direction of the industry | Tax rate | Tax type

Liu Xiuwen, member of the Standing Committee of the National People's Congress and deputy director of the Budget Working Committee, found through research that due to the parallel application of multiple tax rates, there is a problem in many industries where multiple tax rates are applied simultaneously to a single transaction. Taking the express delivery service industry as an example, express delivery service is a comprehensive service composed of multiple continuous business processes such as receiving, sorting, transportation, and delivery. However, due to the multiple tax rates of value-added tax, each express delivery order needs to be divided into two types of business: transportation service and logistics auxiliary service, with tax rates of 9% and 6% respectively. The express delivery industry has reported that if each order is split, companies may even need to spend 50 yuan to split orders worth 10 yuan.

The draft value-added tax law, which has received much market attention, has recently been submitted for second review by the Standing Committee of the National People's Congress. As the largest tax category in China, value-added tax accounts for approximately 30% of the national tax revenue. Therefore, every subtle change in legislative provisions affects the nerves of enterprises.

What modifications have been made to the second draft review

Compared to the first draft, the second draft of the value-added tax law mainly elevates the current relevant policy provisions into laws, further enriching and improving the small-scale taxpayer system.

Previously, there was relatively little content related to small-scale value-added tax taxpayers in the first review draft, and many members of the Standing Committee, local authorities, and units provided suggestions on this. As the largest taxpayer group in China, the number of small-scale value-added tax taxpayers exceeds 50 million, accounting for 80% -90% of all value-added tax taxpayers, mainly small and medium-sized enterprises, and their importance is self-evident.

According to suggestions from all parties, the second draft of the draft clearly states that taxpayers whose annual taxable value-added tax sales do not exceed 5 million yuan are small-scale taxpayers; Add regulations: Small scale taxpayers with sound accounting and the ability to provide accurate tax information can register with the competent tax authority and calculate and pay value-added tax according to the general tax calculation method; Additional regulations: According to the needs of national economic and social development, the State Council may adjust the standards for small-scale taxpayers and report them to the Standing Committee of the National People's Congress for the record.

At the same time, in order to highlight the characteristics of value-added tax beyond its price, the second draft of the draft adds provisions that the value-added tax amount should be separately listed on the transaction voucher in accordance with the regulations of the State Council.

In terms of retained tax refunds, the second draft of the draft has absorbed the achievements of retained tax refunds reform in recent years and further improved the corresponding system. For example, the draft clearly stipulates that taxpayers have the right to independently choose the method of handling the retained tax amount, which can be carried forward to the next period for further deduction or applied for a refund; Authorize the State Council to formulate relevant specific measures.

The members of the Standing Committee of the National People's Congress generally believe that these revisions to the second review of the draft are conducive to improving the accuracy, scientificity, and enforceability of the law. However, overall, there are still some ideas and traces of tax system translation in it. They look forward to further deepening the reform.

High demand for degenerate tax rates

In order to implement the principle of statutory taxation, the process of tax legislation in China has gradually accelerated in recent years. Currently, 12 out of 18 tax categories have completed legislative tasks, and the remaining value-added tax, tariffs, real estate tax, etc. are considered "difficult to gnaw on" in tax legislation.

In fact, since China fully implemented the "business tax to value-added tax" reform in 2016, the reform of value-added tax has been ongoing, and each adjustment has had a profound impact. As far as the current tax system is concerned, the contradiction mainly focuses on multiple tax rates and their scope of application.

Liu Xiuwen, member of the Standing Committee of the National People's Congress and deputy director of the Budget Working Committee, stated that value-added tax is a price outflow tax levied on the sale of goods and provision of services at multiple stages. Its principle is to use a collection mechanism of "upper collection and lower deduction" and "input deduction". That is, the output value-added tax paid by upstream enterprises when selling goods can be deducted as input value-added tax for downstream purchasing enterprises. The difference between paying output tax and input tax can be achieved, and only the value-added part is taxed at each stage, avoiding duplicate taxation in the middle links of the industrial chain.

Internationally, value-added tax is widely regarded as the most obvious tax type that effectively raises income and features a neutral tax system. The direct effect is that the tax burden is the same for both external procurement and self production of enterprises, which is conducive to promoting rational division of labor in industries.

"Starting from the principle of value-added tax, the complete and sufficient deduction chain of value-added tax input and output can offset all input taxes in intermediate transaction links. Continuous and uninterrupted chain is the foundation and guarantee for value-added tax to play its institutional advantages." Liu Xiuwen said that internationally, it is widely believed that covering all goods and services, a single tax rate, no reduction or exemption, and sufficient input deduction are the most ideal value-added tax system.

There are three levels of value-added tax rates set under the current regulations in our country, and different industries and sales forms are subject to different tax rates of 13%, 9%, and 6%, respectively. The second review of the draft still retains the three levels of tax rates and the original scope of application.

Liu Xiuwen previously conducted relevant research and found that there are many differences in value-added tax collection due to multiple tax rates in practice, and there has always been a high demand from various sectors of society for tax rate simplification reform.

He said that the parallel application of multiple tax rates means that different goods and services are subject to different levels of tax rates. From the perspective of the principle of value-added tax ring deduction, there will be phenomena such as "high taxation and low deduction" and "low taxation and high deduction", which affect the scientificity of the tax system and the fairness of tax burden. In addition, there are also significant tax incentives in both quantity and scale, which can lead to the breakage or incompleteness of the value-added tax deduction chain and require further cleaning and regulation.

"There are many misunderstandings in practice, as if reducing value-added tax for a certain industry benefits, but it's not entirely the case." Zhu Mingchun, a member of the Standing Committee of the National People's Congress and Deputy Director of the Budget Working Committee, said that in recent years, the government has introduced many tax and fee reduction policies to help enterprises alleviate difficulties. Specifically, when it comes to value-added tax, the situation is quite complex.

He said that after an industry lowers its tax rate, its downstream industries often increase their tax burden. "Because when you buy your product, it is deducted from the input tax, and when the upstream reduces the tax rate, it is not a normal neutral tax rate. After the tax rate is reduced, the amount that can be deducted is less, resulting in an increase in downstream tax burden, which is unequal."

Zhu Mingchun also mentioned a situation where when an industry is exempt from value-added tax, it is actually only exempt from output tax, but the purchase input tax cannot be deducted. "Sometimes, they do not enjoy preferential treatment, and the actual tax rate may even increase.". Therefore, the second review of the draft stipulates that enterprises can apply for or choose to waive this discount.

Liu Xiuwen's research found that due to the parallel application of multiple tax rates, there is a problem in many industries where a transaction behavior is subject to multiple tax rates at the same time. It is necessary to artificially split and apply different tax rates, and the execution standards of tax authorities in different regions are not uniform enough, resulting in "different policies in the same industry", seriously affecting market stability expectations and fair competition.

He takes the prominent express delivery service industry as an example. Express delivery service is a comprehensive service composed of multiple continuous business processes such as receiving, sorting, transportation, and delivery. However, due to the multiple tax rates of value-added tax, each express delivery order needs to be divided into two types of business: transportation service and logistics auxiliary service, with tax rates of 9% and 6% respectively.

According to the feedback from the express delivery industry, most express delivery companies in China have a huge business volume. If each order is split, companies may even need to spend 50 yuan to split orders worth 10 yuan. The tax collection and execution vary among different companies and regions, and compliance costs and risks are too high, causing great competitive pressure and uncertainty for the industry, which is not conducive to creating a good business environment.

Liu Xiuwen suggested that relevant departments should follow the major decisions and deployments of the Party Central Committee on "promoting value-added tax reform, appropriately simplifying tax rates," "optimizing tax system structure," and "improving modern tax system," actively respond to the expectations of society and the call of the market, and deeply study and analyze the necessity and feasibility of reform measures such as simplifying and optimizing tax rates, clearing and regulating tax incentives. ".

"Good law can guarantee good governance"

In the industry's view, there is still a long way to go. Previously, Liu Shangxi, Secretary of the Party Committee and President of the Chinese Academy of Financial Sciences, stated that simplifying the value-added tax rate appropriately is the direction, but it cannot be completed overnight. It is necessary to consider the financial capacity and the impact of changes in tax burden on different industries.

The market calls for a simplified value-added tax rate starting from three tiers and two tiers. Liu Shangxi stated that the necessary condition for combining three levels and two levels is that it cannot bring too much impact when combined. He said that a cliff style three gear and two gear would create risks and serious problems. The three levels of value-added tax rates are applicable to different industries, forming different tax burden patterns, but they affect each other, and any adjustment to the tax rate will affect various industries. "In this situation, we can only make gradual adjustments and achieve a gradual path, and shock therapy cannot be used. We need to make immediate changes."

Wang Huayu, Deputy Director of the Finance and Taxation Law Research Center at Shanghai Jiao Tong University, believes that in terms of simplified tax rates, it also involves the actuarial calculation of adjusted value-added tax revenue and overall tax revenue. It is currently impossible to include clear simplified tax rates in this revision process, and it may only be clear that the State Council has authorized or filed this statutory authority.

Under this premise, Liu Xiuwen also suggests improving the relevant provisions on mixed sales in the second review of the draft, further clarifying the judgment standards for the main business of special industries such as express delivery services, improving the enforceability of the law, and reducing the costs of both parties involved in the collection and payment.

He proposed two plans - one is for the relevant departments of the State Council to determine the unified splitting ratio based on national data statistics, and to clarify it in the implementation regulations. Add an authorization clause after Article 12 of the draft: "The specific measures shall be stipulated by administrative regulations." Another solution is to clarify in the draft that special industries can be split not according to individual business, but according to the main business part of the overall business, and to refine the relevant provisions in the implementation regulations. Add a new paragraph after Article 12 of the draft: "For special industries with extremely large transaction volumes, if it is indeed impossible to accurately determine the main business of taxable transactions, tax rates and collection rates may be applied according to the main business of the taxpayer who engaged in taxable transactions. The specific measures shall be stipulated by administrative regulations."

As for the regulations on mixed sales, the industry is generally optimistic. Wang Huayu said that it is generally believed that rules should be designed according to economic substance and in a way that is beneficial to taxpayers, and a more refined tax collection and management model should be implemented. These opinions and suggestions will be appropriately adopted in the subsequent legislative process.

Obviously, reforms will continue. Value added tax is the main tax type, and all sectors hope to improve it as much as possible through legislation. Liu Xiuwen said, "Good law can guarantee good governance.".

Reporter Zhang Junbin from China Youth Daily and China Youth Network