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After the two sessions of the National People's Congress this year, the state has implemented a series of large-scale tax and fee reductions. In this "feast" of tax reduction and fee reduction, deepening the reform of value-added tax is undoubtedly the "main course", and the real economy is the most important service object in this "main course.


A series of policies to deepen the reform of value-added tax were implemented on April 1. The tax reduction and fee reduction measures for the domestic manufacturing industry are closely related to textile enterprises, which has aroused discussion among industry enterprises. Some people think that the 3% reduction in corporate value-added tax is not strong, which is limited to the benefits of textile enterprises and has limited impact on the industrial chain; others think that the tax rate reduction has indeed reduced the burden on enterprises. So this time the country has taken measures to reduce taxes and fees, the cotton textile industry and what impact?


VAT Reduction for Spinning Enterprises


Value-added tax refers to a transfer tax levied on the basis of the value added generated by the circulation of goods. Experts said that in layman's terms, it is the tax levied on the part of the product that adds value. Tax is levied only if there is value added, and tax is not levied if there is no value added.


For cotton spinning enterprises, taking the approved deduction method of value-added tax for textile enterprises in Henan Province as an example, according to the purchase price of 15600 yuan per ton of cotton (including tax) and the selling price of cotton yarn 23000 yuan (including tax), the original value-added tax was 16%. After calculation, the value-added tax payable by enterprises for each ton of cotton yarn produced is 676 yuan.


Starting from April 1, the state has stipulated that the value-added tax will be reduced by 3 percentage points. Taking the above-mentioned cotton and cotton yarn prices as an example, it will be levied at a rate of 13%. After calculation, the value-added tax payable by enterprises for every ton of cotton yarn produced is 564 yuan. This means that after the tax rate is reduced by 3 percentage points, the tax payable by enterprises for every ton of cotton yarn produced will be reduced by 112 yuan, and the tax payable per ton of cotton yarn will be reduced by 16.6 percent. Obviously, such a magnitude of tax reduction is not small.


For such calculation results, industry insiders said that the above is only a theoretical calculation method, because the company's purchase of cotton and cotton yarn sales prices are in dynamic changes. In addition, the more high-end products, the greater the added value, the more the value-added tax paid, the lower the product, the smaller the added value, the smaller the value-added tax paid. Overall, the reduction in tax burden of textile enterprises in Henan is basically around 100 yuan/ton.


Assuming that the enterprise produces 1 ton of cotton yarn less than before the tax 100 yuan, then the yarn enterprise a year can pay less value-added tax how much? In this regard, experts for the enterprise to calculate such an account, according to the size of the 50000 ingot enterprise, the monthly cotton yarn production of 400 tons of calculation, monthly can pay less value-added tax 40000 yuan, a year is 480000 yuan. Taking 200000 ingot scale enterprises as an example, if the monthly yarn output is 1600 tons, the value-added tax can be reduced by 160000 yuan per month and 1.92 million yuan per year.


Hu Yijian, a professor at Shanghai University of Finance and Economics, said that from a national point of view, calculations have found that a reduction in the value-added tax rate of 16% to 13% will reduce the tax by more than 630 billion yuan. According to the calculation of 3.46 million tons of yarn output in Henan Province in 2018, the average annual tax burden of textile enterprises in Henan alone has been reduced by 0.346 billion yuan. For countries and businesses, the size of the tax cuts is self-evident. For enterprises, a little makes a lot of money, and a sand makes a tower.


It can be seen from this that the series of policies for deepening the value-added tax reform implemented on April 1 can be described as the first big gift package for yarn companies after the spring. A person in charge of a textile enterprise in Henan said that in March, many downstream enterprises signed purchase and sale contracts in advance to offset more value-added tax, resulting in a sharp increase in the number of orders received by textile enterprises. Some textile enterprises placed orders for advance payment for more than 20 days, but since April, the situation has gradually "cooled down".


Tax and fee reductions increase investment confidence.


The reduction of value-added tax has benefited yarn enterprises. Of course, the benefits obtained by enterprises are far more than that. A few days ago, China's Minister of Finance Liu Kun said: "China will reduce the proportion of basic old-age insurance units for urban workers from May 1, the local can be reduced from 20% to 16%, effectively reduce the proportion of social security contributions of enterprises. Experts expect that the reduction of social security rates can reduce fees for enterprises by 800 billion yuan."


Take a textile enterprise in Luohe as an example. The number of employees in the enterprise is 400 and the annual output of yarn is 8000 tons. The enterprise pays endowment insurance for its employees according to 60% of the average wage of the local society. At present, the enterprise pays 502 yuan per employee every month. After the social security rate is reduced to 16%, the calculation result is 403 yuan. The social security rate is reduced by 4 percentage points, which can save 100 yuan per person per month, the total annual savings is 420000 yuan. By reducing taxes and fees, the enterprise can save a total of 1.22 million yuan per year. If from a national perspective, it is expected to reduce the burden of corporate taxes and social security contributions by nearly 2 trillion yuan throughout the year.


Not only this textile enterprise, but also many yarn enterprises generally believe that the tax reduction and fee reduction will reduce the burden of enterprises, improve the profit level, and facilitate enterprises to go to battle with light equipment. At the same time, the whole operating cost of cotton spinning industry chain will also be reduced, so as to enhance the competitiveness of enterprises in the international market.


Liu Zibin, chairman of Lutai Textile Co., Ltd., said: "70% of Lutai Textile's products are sold overseas, of which high-end fabric exports account for 20% of the global similar market. The new tax policy will bring more than 5200 million yuan in tax cuts for the company throughout the year."


"Hearing the two sessions announced that the value-added tax rate will be reduced again, we were in the WeChat group heated discussion. National tax cuts, corporate tax burden, reduced financial pressure, investment confidence, business light, development more stamina. We calculated that after April 1, only a value-added tax, is expected to reduce the tax burden of 200000 yuan for the whole year." The implementation of the real tax and fee reduction policy has made a yarn enterprise in Jiangsu confident in winning the "hard battle" of traditional industrial transformation and upgrading. The person in charge of the company believes that in the transformation and upgrading of traditional industries, investment in science and technology is the breakthrough, and increasing the added value of products is the direction, while tax reduction and fee reduction press the "fast forward button" for the transformation and upgrading of traditional industries ".


Relevant professionals believe that reducing the value-added tax rate and social security contribution rate can significantly reduce the tax burden of enterprises and bring positive impact to manufacturing enterprises, such as effectively reducing operating costs. These funds can be used in the conversion of new and old production capacity, expand production lines, improve production efficiency, strengthen product research and development, and effectively enhance the core competitiveness of enterprises. In highly competitive industries, some of the dividends of tax cuts will also be passed on to end consumers through product price cuts, thereby stimulating demand and boosting corporate earnings growth.


Experts believe that since last year, affected by Sino US trade, China's cotton spinning downstream consumption and export are weak, which has a great impact on cotton prices. Through the reform of tax reduction and fee reduction, it will play an important role in reducing the operating costs of cotton spinning industry chain, stimulating market vitality, enhancing the competitiveness of domestic textile enterprises and hedging the fluctuation of international export market. In particular, it will play a very positive role in stabilizing cotton prices, increasing cotton consumption and ensuring the healthy and sustainable operation of the cotton market.