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Impact of "Camp Reform" on Construction Enterprises

Date: 2017-08-31
Times of browsing: 16
Release date: 2017-08-31
Times of browsing: 16

(A) of the tax impact on construction enterprises

After the construction enterprise business tax is levied for value-added tax, the first issue involved is the deduction of input tax amount. for example:

Take construction companies as an example. Suppose the gross profit margin of the project is 10%. Of the settlement cost of the project, about 55% of raw materials (45% of the cost of construction materials, 40% of steel and 15% of other materials) Labor cost accounts for about 30%, machinery usage fee 5% and other expenses account for no more than 10%. Suppose that the annual operating income is 111 million yuan and the operating cost is 99.9 million yuan (the sales revenue and costs are all inclusive of VAT).

Business tax reform before the business tax should be 3.33 million yuan (11100 × 3%).

After the VAT reform, the labor cost can not offset the input tax, so the input tax can be deducted to be 8.7 million yuan [9990 × (55% + 5%) ÷ (1 + 17%) × 17%] The output tax is 11 million Yuan [11100 ÷ (1 + 11%) × 11%], should pay VAT 2.3 million yuan (1100-870), the tax burden on construction enterprises declined.

The above is a theoretical algorithm, but in fact the characteristics of construction enterprises will bring many challenges to the calculation of value added tax, for example, more sources of construction materials, VAT deductible difficulty, due to the difficulty of invoice management, Many materials input tax can not be normal deduction, so that the real tax burden on the construction industry. According to the Notice of the Ministry of Finance and the State Administration of Taxation on the Policy of Collecting Value Added Tax at Low Rates of Certain Value-added Taxes and Simple Measures (Cai Shui [2009] No. 9), ordinary taxpayers may choose to sell the following goods according to the simple According to the 3% collection rate (Note: According to the "Circular of the Ministry of Finance and the State Administration of Taxation on the Collection Policy of deferred VAT" (Cai Shui [2014] No. 57) on June 13, 2014, effective from July 1, 2014 The implementation of the 3% collection rate, the original collection rate of 6% is no longer applicable) Calculation and payment of value added tax: ① construction and production of building materials used in sand, soil, stone; ② their own mining of sand, earth, rock or other minerals for continuous production Of brick, tile, lime (excluding clay solid brick, tile); ③ tap water; ④ commercial concrete (only to cement as raw material production of cement concrete). The goods listed above are all the main materials of the project, accounting for a large proportion of the project cost. Assuming construction companies purchase the above materials are able to obtain formal VAT invoices, deductible input tax rate of 3%, while the construction VAT VAT rate of 11%, construction companies to purchase more of the above materials will increase 8% Tax costs, thereby increasing the actual tax burden on the construction industry, squeezing profit margins.

As the purchase of machinery and equipment can offset the input tax VAT is conducive to improve the level of machinery and equipment enterprises, construction enterprises through the introduction of new machinery and equipment, reduce labor costs for the operation of enterprises to update equipment and expand the scale of operations provided A strong condition, while improving the level of mechanical operations can reduce the incidence of major accidents, promote safe production and ensure the safety of workers life.

(B) the impact of cost management and accounting

First, the construction unit will have a major change in the preparation of the budget estimates. The corresponding design estimates and construction budget should also be implemented according to the new standards. The contents of the open bidding issued by the construction units should also be adjusted accordingly.

Second, this change has complicated the tendering of construction enterprises. For example, in the preparation of tenders, the direct costs of raw materials and fuels do not include the VAT input VAT. In actual construction, it is difficult to accurately predict how much the cost can be obtained to input VAT.

Third, due to the implementation of the new quota standards, corporate construction budget needs to be re-amended, the enterprise's internal quotas have to be re-compiled.

(C) the impact on the business model

Business tax reform VAT is conducive to curb illegal subcontracting, subcontracting. Some enterprises subcontract the whole project after contracting the project, which is expressly forbidden by the Construction Law. In the case of complete subcontracting of the project, the construction enterprise (the unit undertaking the project from the contractor) as the first contractor should press the From the contractor to obtain all the engineering settlement and extra charges to determine the amount of sales tax and output tax, from the second contractor (from the first contractor to undertake the project unit) to obtain value-added tax invoices as input tax, from In the account processing, it can be found that there are no purchased materials available for deductible, so that it is easy to judge the realities of all the subcontracting transactions in the project. Article 29 of the Construction Law stipulates that "the general contracting units are forbidden to subcontract the works to units that do not have the corresponding qualifications." If the subcontracting units are small-scale taxpayers or contractors, the input VAT will be substantially reduced and the corporate tax Negative will rise, profits will also be reduced. Once the tax authorities confirmed illegal subcontracting or illegal subcontracting, it will prohibit the first contractor to offset the input tax, then the first contractor's tax burden will be greatly increased, the profit will be greatly diminished, for profit margins have not been large Construction enterprises have a greater impact on operating results, which will play a role in deterring illegal subcontracting.

Another common form is anchored, many affiliated units to purchase materials do not invoice, material procurement prices lower. If you do not issue VAT invoices after the tax reform, the affiliated units will not be able to obtain the deduction benefits and the tax burden will increase. If you issue a special VAT invoice, you must have a real transaction. The material suppliers often take the opportunity to increase their fares and attach to the units Profits will be substantially reduced, which will severely impact the calling behavior.

For the joint venture project, since business tax and cost are basically not related, the business tax is calculated on the basis of the total project cost as tax basis. There is no problem of tax deduction. Associate partners often do not have a sound accounting system and do not have the consciousness of obtaining invoices. After the implementation of value added tax, value added tax and project costs, costs and expenses are inseparable. If the cooperative projects in the procurement, leasing, subcontracting and other links can not get enough VAT invoices, then the VAT input tax is very small, less tax deductible, more taxes paid, the tax burden Even over the project's profit margins, the total package and joint venture partners will be undesirable, tax-related risks threaten the existence and development of joint venture project management.

(D) the impact on business management

Construction projects scattered throughout the country construction projects, the material procurement area is also decentralized, material management departments and more complex, each purchase business should be based on the existing value-added tax invoice management issued a VAT invoice, and a huge number of invoices collected Audit, sorting and other work difficult, a long time. According to the provisions of the current system, the amount of input tax to be completed within 180 days of certification, its work is very difficult. In fact, the tax problem is not as simple as theoretical analysis. If you get the invoice from the other party, you should pay attention to whether it is a special invoice, the time on the invoice, whether the invoice chapter is correct or not. These undoubtedly put forward higher requirements on the financial personnel of construction enterprises and even the staff of the operating departments. In addition, business tax and VAT taxpaying locations are different, construction enterprises due to its operating characteristics, tax locations will have a greater change.

(E) the impact on financial accounting

Since the cost of inventory such as raw materials and auxiliary materials purchased by construction enterprises and the fixed assets such as machinery and equipment need to be deducted from the input tax on the VAT receipts obtained, the total assets of the enterprise will decrease to a certain extent compared with that before the change without the operation, Liabilities increased.

For the company's financial statements, before the change in the camp, the main business income is the business tax, which belongs to the tax-inclusive amount. After the camp is changed, the main business income does not include the value-added tax, which is the after-tax income. The calculation method, the profit margins of enterprises are also different values, assuming that business tax and value-added tax in the implementation of business income and the actual tax burden equal to increase after the business camp will appear to reduce business income and profit margins.

Impact on corporate cash flow. Construction enterprises generally implement the method of withholding sales tax, construction unit labor inspection, take the verification and payment from the workmen's direct sales tax deduction, the camp after the change, the construction unit will not be withheld directly on behalf of the added value Tax, and directly by the construction enterprises in the current tax authorities to pay value-added tax, but this time the construction unit does not pay workmen's compensation for construction companies, that is, to pay the value-added tax in the past, after collecting the project money, Sometimes the lag time is longer, which will result in an increase in the net cash flow of the operating activities of the enterprises and increase the financial strain of the enterprises.

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