[Interpretation] Starting from 4.1, VAT reform related policies and original references will help you issue the right invoices

Latest update time：2019-03-25

Reads：

——From April 1, the current 16% VAT rate for manufacturing and other industries will be reduced to 13%, and the current 10% VAT rate for transportation, construction and other industries will be reduced to 9%...

Since this tax adjustment is the second adjustment after the 1% tax reduction last year, and the tax reduction this time is 3%, the adjustment time is tight and the intensity is greater. We have sorted out some policy information and sorted it out for everyone to help you issue the " correct " invoice .

Please note: The following information is from the Internet, and the situations of each company are different. The information is for reference only. If you have any questions about the tax rate adjustment of Future Electronics, please contact Future Electronics' official website online customer service (hotline: 4008216206) or your account manager for consultation.

Policy original Text :

According to the government work report, we will deepen the VAT reform, reduce the current 16% tax rate for industries such as manufacturing to 13%, and reduce the current 10% tax rate for industries such as transportation and construction to 9%, to ensure that the tax burden of major industries is significantly reduced; keep the 6% tax rate unchanged, but take supporting measures such as increasing tax deductions for production and life services to ensure that the tax burden of all industries will only decrease and not increase, and continue to move towards the direction of merging three tax rates into two and simplifying the tax system. Subsequently, the relevant departments further clarified that it will be officially implemented on April 1.

Impact analysis:

The VAT rate reduction has been confirmed. Purchase contracts from March to April must take into account the impact of the tax rate reduction. Should the contract be signed after April 1, or should the tax rate be considered when signing the contract ? Purchasing and financial personnel must also sort out the company's recent and long-term contracts in a timely manner.

Policy Explanation:

1: How to issue invoices for transactions that occurred before or after April 1st?

If the VAT liability has occurred before April 1, 2019, the taxpayer must issue an invoice to the customer at the applicable 16% or 10% tax rate before April 1, 2019. If the VAT liability occurs after April 1, 2019 , please follow the new tax rate.

2. When does the VAT tax liability occur?

For example, if the goods have been sold before April 1, 2019, the taxpayer should issue an invoice to the customer at the applicable 16% or 10% tax rate before April 1, 2019. Of course, there are many different situations for the time when the tax obligation occurs, which can be referred to the detailed provisions of the fiscal and taxation rules.

According to the Provisional Regulations of the People's Republic of China on Value Added Tax (Decree No. 538 of the State Council of the People's Republic of China):

Article 19 When the VAT liability arises:

(1) Where taxable sales take place, the date is the day on which the sales proceeds are received or the receipt for the sales proceeds is obtained; if an invoice is issued first, the date is the day on which the invoice is issued.

(ii) For imported goods, the date is the day of import declaration.

The time when the VAT withholding obligation occurs is the day when the taxpayer's VAT payment obligation occurs.

3. If the tax obligation has occurred before April 1, 2019, but due to various reasons, the invoice for this business was not issued before April 1, 2019, and the invoice for this business needs to be issued after April 1, 2019, should the new tax rate or the old tax rate be applied?

Invoices should be issued according to the old tax rate . If a taxpayer needs to issue a VAT invoice for VAT taxable sales that did not issue a VAT invoice before the VAT rate adjustment, the invoice should be issued according to the original applicable tax rate of 16% or 10%.

It should be noted that if taxpayers still have taxable sales for which VAT invoices were not issued before the tax rate adjustment in 2018 and need to issue additional VAT invoices, they can do so in accordance with the relevant provisions of Announcement No. 18 and the original applicable tax rates of 17% or 11%.

4. How to reduce taxes on imported goods?

For VAT taxable sales or imported goods by general VAT taxpayers (hereinafter referred to as taxpayers) , the tax rate will be adjusted from 16% to 13% if it was originally subject to a 16% tax rate; and from 10% to 9% if it was originally subject to a 10% tax rate.

5. After the implementation of the policy of reducing the value-added tax rate on April 1, 2019, how should taxpayers issue red and blue invoices if sales discounts, suspensions or returns occur?

If a general VAT taxpayer has issued a VAT invoice at the original applicable tax rate of 16% or 10% before the VAT rate adjustment, and needs to issue a red invoice due to sales discounts, suspension or return, the red invoice shall be issued according to the original applicable tax rate; if the invoice is incorrect and needs to be reissued, a red invoice shall be issued first according to the original applicable tax rate, and then the correct blue invoice shall be reissued.

It should be noted that if the taxpayer has previously issued a VAT invoice at the original applicable tax rate of 17% or 11%, and needs to issue a red invoice due to sales discounts, suspension or return, it should be implemented in accordance with the relevant provisions of the "Announcement of the State Administration of Taxation on Unifying the Standards for Small-Scale Taxpayers and Several Other VAT Issues" (Announcement No. 18 of the State Administration of Taxation in 2018, hereinafter referred to as Announcement No. 18).

According to the above explanation, the tax authorities may impose penalties on the following situations :

1. The products have been sold out in March and the invoicing is requested to be suspended until April, or the invoicing is requested to be issued according to the new tax rate of 13%.

2. Invoices with an invoice issue date after April 1st must be invoiced at the new tax rate of 13%, or invoices with a tax rate of 16% will be rejected starting from April 1st.

The above information is referenced from:

"Announcement on Relevant Policies for Deepening VAT Reform" (Announcement No. 39 of 2019 by the Ministry of Finance, State Administration of Taxation and General Administration of Customs) Click here to read the full text of the announcement

"Notice on Deepening VAT Reform" (State Administration of Taxation Notice No. 14, 2019) Click here to read the full text of the notice

Interpretation of the "Announcement of the State Administration of Taxation on Deepening Value-Added Tax Reform" Click to read the full announcement

Tips on VAT: A 3% tax cut does not equal a 3% price cut

Although there is only one word difference between a 3% price cut and a 3% tax cut, the difference is huge. This has recently sparked a lot of online debate.

In fact, value-added tax is the tax paid on the profits generated by enterprises.

Value-added tax is a turnover tax levied on the value-added amount generated by goods (including taxable services) during the circulation process. From the principle of tax calculation, value-added tax is a turnover tax levied on the added value or added value of goods in multiple links of commodity production, circulation, and labor services . It is implemented as a tax outside the price , that is, it is borne by consumers. Taxes are levied only when there is value-added, and no tax is levied when there is no value-added.

To put it simply, take the gross profit of 10% and the payment of 100,000 yuan as an example:

Before tax deduction , you need to pay:

Input tax = 90,000*16%=14,400

Output tax = 10*16% = 16000

VAT = 16000-14400 = 1600

After the tax reduction , you need to pay:

Input tax = 90,000*13%=11,700

Output tax = 100,000*13%=13,000

VAT = 13000-11700 = 1300

The difference between the amount before and after the tax reduction: 1600-1300=300 (i.e. for a payment of 100,000 yuan, the company only paid 3% of its profit of 10,000 yuan = 300 yuan in tax, rather than 100,000*3% = 3,000 yuan)

Therefore, tax reduction does not mean price reduction. It only reduces the tax rate of the value-added part. We still need to be cautious when reducing prices!