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May Sees Enterprises in Dongguan Being Showered with a New Round of Burden-Relief “Bonus Rain”: Manufacturing Industry and Small and Micro Businesses in Dongguan Enjoy Notable Dividends
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Three in-depth VAT reforms are put in place in Dongguan

Manufacturing industry and small and micro businesses in Dongguan enjoy notable dividends

timedg.com Lower the tax rate for two types of value-added tax (VAT), increase the VAT standard for small-scale taxpayer, extend a lump-sum refund to certain industries whose initial input VAT payments are yet to be deducted… According to the unified deployment of the Ministry of Finance and the State Administration of Taxation, enterprises in Dongguan will be showered with a new round of burden-relief “bonus rain” starting from May 1. The journalist learned from Dongguan Municipal Local Taxation Bureau that recently the much expected preferential policies of the three in-depth VAT reforms have been officially put in place in Dongguan. Given the fact that the tax-reduction policies directly benefit the manufacturing industry and small and micro businesses, leading enterprises like OPPO and a batch of small and micro businesses in Dongguan have immediately enjoyed lower tax rate and fees.

Measure: VAT tax rate being lowered 1%

Effect: Enterprises in Dongguan will enjoy lower cost and bigger room for innovation

On March 28the decision of implementing three in-depth VAT reforms preferential policies was made at the State Council executive meeting. Starting from May 1, 2018, the VAT tax rate for industries like manufacturing industry will be lowered from 17% to 16% and the VAT tax rate for such industries as transportation, construction, basic telecommunications service and goods like agricultural produce will be lowered from 11% to 10%. It is estimated that the amount of the tax reduction of the entire year can reach RMB 240 billion. 

The journalist learned from Dongguan Municipal Local Taxation Bureau that starting from May 1, the city has successively issued the VAT invoices after the VAT tax rate reduction. “The VAT tax rate for our products was lowered from 17% to 16%, which means the reduction of the overall VAT tax fees approach 6%. For manufacturers like us, the 6% reduction can be used to increase profit or to participate in competition, which will also benefit most of the enterprises at both the upstream and lower-reach of the manufacturing chain.” Mr. Gong in charge of the company’s finance said so after OPPO successfully issuing a VAT invoice with a 16% tax rate.

It is estimated that OPPO can pay RMB 120 million less for VAT and associated added tax fees this year due to the “tax rate reduction” preferential policy. This is undoubtedly a “timely rain” for the manufacturing enterprises in Dongguan represented by OPPO. To cope with the increasingly intense global competition, enterprises in Dongguan are in urgent need of brand promotion, R&D investment and equipment upgrading. The tax rate reduction therefore has immediately lowered production cost and expand room for innovation. “The country’s successive policy packages have put the reform measures in place at policy level, allowing enterprises to truly enjoy the dividends paid by reform.”Mr. Gong said.

Measure: Standard for small-scale taxpayer being increased

Effect: Benefits will be delivered to more small and micro businesses in Dongguan

Aside from the successive issuance of new tax rate invoices, the new policy of “unifying the standard for small-scale taxpayer” was also implemented. According to the new policy, the annual sales volume standard for small-scale taxpayers from industrial and commercial enterprises raises from 500,000 RMB and 800,000 RMB to 5 million RMB and enterprises registered as general taxpayers will be allowed to switch their status to small-scale taxpayers within a given time.

 “Our factory’s accountant called me right away after learning that the standard for annual sales volume for VAT small-scale taxpayers was adjusted to 5 million RMB. For our factory, this is indeed a substantial benefit.” said Mr. Xie, owner of Dongguan Dalingshan Xiangxing Paper Factory. The factory’s accountants have already done an account for the company. As early as in 2006, the company became a general taxpayer as its annual sales volume exceeded 500,000 RMB. Considering its sales in the past 12 months, the monthly tax fee the company needs to pay will change from 300 RMB to 0 after switching to small-scale taxpayer.

According to the analysis of the staff with Goods and Services Tax Department of Dongguan Municipal Local Taxation Bureau, “even though there is only 1 percentage reduction of VAT tax rate, that can make a significant difference. And the unification of VAT small-scale taxpayer standard further relieves small and micro businesses, startups in particular, of their burdens, which allows more enterprises to enjoy the benefit brought by lower tax rate and thus reach their maximum potential. Refund for input VAT payments to be deducted indicates the encouragement given to advanced manufacturing industry and modern service industry. Therefore, the burden-relief and tax-reduction measures have pointed the right direction, which has profound implications for renown international manufacturing city like Dongguan.”

Special note

Tax control invoice issuance system needs to be connected to the net and upgraded timely

It is said that the reform benefits a lot of enterprises and covers a wide range of areas. But many taxpayers still face some doubts and troubles in the process of policy understanding, invoice issuance operation and tax return, which need to be addressed promptly. For instance, relevant taxation departments have sent out special note: taxpayers must connect the tax control equipment to the internet and upgrade the tax control invoice issuance software for VAT invoice, otherwise VAT invoice will fail to be issued from May 1.

Concerning this, Dongguan Municipal Local Taxation Bureau combined online and offline methods to tutor VAT reform and accomplish renovation and upgrading of collection management and invoice issuance system. It also utilized background data to conduct effect analysis. According to Mr. Cai from Dongguan Telecom, with the help of the tax officers, Telecom system has accomplished the upgrading of invoice issuance system and has allocated the tax rates of 16% and 10% in the system in advance on the evening of April 28. It has therefore ensured frictionless access to invoice issuance for the initial day with the implementation of the reform and allowed for master of tax return operation after the tax rate adjustment.

 

Source: timedg.com

 

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