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VAT Tax Rate Lowers Oil And Chemical Industry
Mar 30, 2018

Reduction of VAT tax rate by one point Uniform standard for small-scale taxpayers

On March 28, the Premier of the State Council, Li Keqiang, presided over the executive meeting of the State Council to determine measures to deepen the reform of VAT and further reduce the tax burden on market participants. People in the petrochemical industry said that this is a great advantage for the industry.

The conference pointed out that starting from May 1, 2018, the value-added tax rate of the manufacturing industry and other industries will be reduced from 17% to 16%, and the VAT rate for goods such as transportation, construction, basic telecommunications services, and agricultural products will be from 11%. To 10%, it is estimated that a tax reduction of 240 billion yuan will be achieved throughout the year; the standard for small-scale VAT taxpayers will be unified, and annual sales standards for small-scale taxpayers in industrial and commercial enterprises will be adjusted from 500,000 yuan to 800,000 yuan or less. Under 5 million yuan, and within a certain period of time allow companies registered as general taxpayers to be registered as small-scale taxpayers; enterprises and power grid companies that meet the requirements of advanced manufacturing industries such as equipment manufacturing, R&D and other service industries will be in a certain period of time. The input tax amount that has not been deducted within one-time is refunded once. The implementation of the above three measures will reduce the tax burden on market entities by more than 400 billion yuan in the whole year, and domestic and foreign-funded enterprises will all benefit equally.

This tax cut will bring huge benefits to the manufacturing industry, including petrochemicals. Many petrochemical companies said that the adjustment of the VAT policy is what the market and companies are looking forward to. A person in charge of a state-owned chemical company stated that lowering the VAT tax burden will help improve the profitability of enterprises, especially as the country’s openness to the outside world continues to increase, and petrochemical enterprises are increasingly participating in international competition, and the Chinese enterprises will reduce the tax burden. In the international market has more competitive advantage.

Li Yunlong, Purchasing Manager of Shandong Kaisheng New Material Co., Ltd., told reporters that lowering the VAT tax rate will provide strong support for manufacturing companies to reduce costs and increase efficiency and release competition. Kaisheng New Materials has sales of more than 500 million yuan in 2017. After a rough estimation, the company can save more than 1 million yuan in tax expenditure annually after tax reduction of VAT, which will help increase corporate profits and liquidity, increase technology research and development, and provide training for talents. Other inputs.

According to Zhu Ying, director of the Information and Marketing Department of the Petrochemical Federation, the reduction of VAT tax rate is an undoubted good thing for the oil and chemical industries. In 2017, the main business income of the entire industry reached 13.78 trillion yuan, and the total profit was 846.2 billion yuan. Such a huge volume will certainly benefit a lot. However, it should be noted that the specific operating methods and details of the VAT reduction are not yet clear. It is not known whether some products are involved in the first-come-first-half return. The actual implementation of the tax reduction policy still requires multiple efforts. Many petrochemical companies also reported that compared to the reduction of VAT tax rates, pressures on the rising production and operating costs of raw materials, personnel, transportation, etc. are still not small. If the input tax is taken into account, the reduction in the preferential rate of tax reduction is not as large as expected. . However, at the national level, a reduction of 1 percentage point in tax rate is no small force, and tax policy reforms are expected to continue.