What is the tax rate for the business-to-business tax increase in the life service industry in 2019?

Starting from May 1, my country will comprehensively implement the business tax to value-added tax reform, and the construction, financial, real estate, and life service industries will also be included in the pilot scope. Shortly after the introduction of this policy, everyone began to speculate on the changes in tax rates for the four major industries. On March 18, the State Council executive meeting reviewed and approved a comprehensive pilot program for replacing business tax with value-added tax, and the tax rates for the four major industries have also been determined, among which the life service industry is subject to a 6% tax rate.

At this point, the last veil of the business tax-to-VAT reform has been lifted.

Among them, the life service industry is the industry most closely related to the daily life of ordinary people. Therefore, what impact will the applicable tax rate change to 6% have on the life service industry? How to convey value-added tax to individual consumers and other issues? Attention.

At present, most of the applicable tax rates for the life service industry under the business tax are 5%, while the applicable tax rate after the business tax-to-VAT reform is 6%. Although the tax rate is 1% higher than the previous tax rate, since inputs can be deducted Therefore, for taxpayers in the life service industry who pay more input taxes, the overall situation is relatively favorable.

However, due to the particularity of the industry, there are still many difficulties in the process of implementing the business tax to value-added tax reform in the life service industry.

Difficulty 1: Industry characteristics make it difficult to determine the value-added part

First of all, let’s take a look at what industries are included in the life service industry targeted by the business tax-to-VAT reform?

< p> It is reported that the life service industries that need to replace business tax with VAT mainly refer to the catering industry, accommodation industry, laundry and dyeing industry, hairdressing and beauty industry, education industry, housekeeping service industry, tourism industry and various agency services (note: cargo transportation agency, customs declaration Agents, accounting agents, etc. have changed from business tax to value-added tax) and other business formats.

Generally speaking, the single stores in these industries are small in size, the operators are relatively dispersed, and they directly face the final consumers. Therefore, it is difficult to calculate the input price of this industry and determine the value-added part.

Difficulty 2: The industry as a whole lacks VAT compliance experience

For a long time, enterprises in the life service industry have been taxpayers of business tax. Business tax and VAT are subject to accounting and taxation mechanisms. All are different, so taxpayers in the life service industry lack VAT compliance experience. Before the full implementation of the business tax-to-VAT reform on May 1, in order to smoothly transition from business tax to value-added tax, enterprises in the life service industry must take some measures to actively respond to the changes. Based on this, relevant experts have given some suggestions, such as the need to conduct value-added tax training for financial and business personnel; to develop a set of compliance processes including value-added tax accounting and management.

Difficulty three: The initial corporate tax burden may increase

The life service industry is mainly a labor-intensive industry, so labor costs are relatively high. In the early stages of the business tax-to-VAT reform, there may be a situation where the deductible input amount is small and the output tax amount is large, which means that the tax burden of the enterprise is likely to increase.

At the same time, we also mentioned above that financial personnel in the life service industry lack relevant VAT business experience. Therefore, companies in the early stage need funds to train the skills of financial personnel and establish related supporting financial management systems. Investment will naturally increase the economic burden on enterprises.

So under the current circumstances, how should enterprises in the life service industry rise to the challenge, turn challenges into opportunities, and achieve tax optimization while reducing the burden on enterprises? It is mainly divided into Internally and externally:

Internally: First of all, we must pay attention to the relevant training of financial personnel, pay attention to the company's business model and organizational structure, analyze the impact of different tax types and tax rates on corporate taxation, and actively make Adjustments should be made to optimize tax benefits; in terms of tax treatment methods (general tax calculation methods and simplified tax calculation methods), careful inspection and research are required to choose a method that is beneficial to the company.

External: After the business tax to VAT reform, whether the tax burden of enterprises in the life service industry will increase mainly depends on the amount of deduction items. Therefore, we must try our best to choose those suppliers that can pass input deductions. In addition, corporate financial personnel should also learn more about relevant fiscal and taxation policies and fully enjoy some preferential policies, thereby saving costs for the company.

The construction industry and the real estate industry

The original business tax rates of 3% and 5% will be changed to the value-added tax rate of 11%, but the tax burden on the entire industry will not increase.

The business tax to value-added tax reform has been fully implemented, and the construction, real estate, financial and life service industries have all been included in the pilot scope. The construction and real estate industries are subject to a tax rate of 11%, and the financial and life service industries are applicable. 6% tax rate. The society is generally concerned that the construction and real estate industries have changed from the original business tax rate of 3% and 5% to the value-added tax rate of 11%. Will the tax burden increase if the tax rate increases?

"VAT If the tax rate is higher than the business tax rate, it will increase the tax burden of the enterprise. This is actually a misunderstanding." Bai Jingming, deputy director of the China Institute of Fiscal Science, believes that business tax is levied on the turnover of the enterprise, while value-added tax is levied on the value-added of goods and services. The tax bases of the two are very different. Although the value-added tax rate has been increased, the tax burden of these two industries will not increase or even be reduced because of the input tax deduction.

Bai Jingming analyzed that the main inputs in the construction industry are steel, bricks, cement and other building materials, which can be deducted at the 17% value-added tax rate, and the deduction is quite strong. . In particular, the plan also makes transitional policy arrangements for the business model of enterprises contracting work and materials, or contracting work but not materials. General taxpayers can choose to apply the simplified tax calculation method for construction services provided by clearing contractors. Compared with the original business tax rate of 3%, the corporate tax burden remains generally unchanged.

Financial industry and life service industry

If the business tax rate is changed from the original 5% to the value-added tax rate of 6%, the industry tax burden will be significantly reduced.

"How to ensure that the tax burden of all industries is reduced but not increased is both a key and difficult issue. The reform plan has put a lot of effort into this aspect." Professor at Shanghai University of Finance and Economics, Institute of Public Policy and Governance Dean Hu Yijian said that in order to achieve this goal, the plan not only gives full consideration to the tax system design, but also retains the original preferential business tax policies, and also introduces corresponding supporting measures based on the characteristics of each industry.

Financial services mainly include financial and insurance business activities, such as loan services, direct fee financial services, insurance services and financial product transfers. The life service industry covers a wide range of areas, including cultural and sports services, education and medical services, tourism and entertainment services, catering and accommodation services, daily services for residents and other life services.

"Looking at the tax burden comparison alone, without considering the input tax deduction, the 6% value-added tax rate is equivalent to a business tax rate of 5.66%, which is the same as the current business tax rate of these two industries. Very close." Hu Yijian explained that after the tax-to-VAT reform, the amount of deductible input tax in the financial industry and the life service industry will increase, and the tax burden of the two industries will be significantly reduced.

Most of the office spaces in the financial industry are high-end real estate, and they have a high degree of electronic informatization and heavy investment. Through the purchase of real estate and related equipment, as well as the outsourcing of technical services, the financial industry is more likely to achieve tax reductions. Judging from the relevant details, the original preferential business tax policies for the financial industry will basically be retained and continued after the business tax-to-VAT reform. For example, interest income from financial interbank transactions is exempt from VAT, personal insurance with a term of more than one year within the pilot period is exempt from VAT, agricultural insurance is exempt from VAT, etc.

The life service industry is almost all-encompassing and closely related to people’s lives. The 6% tax rate applies to general taxpayers, and there are various deductible inputs. For example, if you open a gym, rent, purchased fitness equipment, etc. can be used as input deductions; if you open a restaurant, purchase and rent of storefronts, store decoration, kitchen equipment, etc., they can also be used as input deductions.

Can the life service industry benefit from the business tax to value-added tax reform?

The "Government Work Report" submitted by the State Council for review at the Fourth Session of the 12th National People's Congress proposed that starting from May 1, The pilot scope of replacing business tax with value-added tax has been expanded to the construction industry, real estate industry, finance industry, and life service industry. From then on, business tax will disappear from the stage of history. The biggest feature of replacing business tax with VAT is to reduce repeated tax payments, which can promote a better virtuous circle in society and help enterprises reduce their tax burden. "Replacing business tax with VAT" can be said to be a tax reduction policy. So can the life service industry, which is most closely connected with people's daily life, enjoy the dividends brought by this "business tax to value-added tax"?

1. The applicable tax rate after the "business tax to value-added tax" reform for the life service industry

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The current business tax rate for the living service industry is generally 5%. After the business tax to value-added tax reform, small-scale taxpayers in the catering industry, tourism, hotel industry, entertainment industry, etc. will adopt a 3% collection rate based on the previously issued "Business Tax to Value-Added Tax Pilot Plan". VAT taxpayers are subject to a tax rate of 6%. For small-scale taxpayers, from the 5% business tax to the 3% simple collection rate, this part will definitely be tax reduced. For general taxpayers who are subject to the 6% tax rate, whether the tax is reduced depends on the deduction situation. For example, in the catering industry, if there is a large deduction, the tax burden will be reduced compared to the 5% business tax that cannot be deducted. The previous business tax For the entertainment industry, which has a tax rate of 5%-20%, the tax rate has been significantly reduced after replacing business tax with VAT.

According to this expectation, the tax rate will be increased from 5% business tax to 6% value-added tax. Since input tax can be deducted on the purchase of goods and services, the overall tax burden may be reduced. The main challenge in achieving overall tax burden reduction will be how to obtain special VAT invoices from suppliers, especially for the catering industry that often conducts transactions in cash and in many cases needs to purchase ingredients from small-scale taxpayers.

2. The financial and taxation impact of the “business tax to value-added tax” in the life service industry

For catering companies, a common phenomenon is that most restaurant suppliers cannot provide value-added tax Regarding invoices, some suppliers are not qualified to issue VAT invoices. For some, issuing invoices will increase costs and supply prices. This cost is likely to be passed on to restaurants. When restaurants cannot raise prices, they will have to reduce profits. However, a new challenge will arise after the business tax reform in the catering industry - food sales (takeaway) need to pay a VAT rate of 17%, while dine-in only needs to pay a VAT rate of 6%. How to distinguish the place where goods or services are provided (services also include the sale of goods) may become a new hot point of controversy.

Applying the 6% VAT rate to the hotel industry should ensure that the main services provided by most hotels (accommodation, conferences and events, and catering) are subject to the 6% VAT rate.

The regulations have now clearly stipulated that the input tax related to the purchased catering services, daily resident services and entertainment services cannot be deducted. Therefore, another major challenge the hotel industry will face is how to reasonably divide the package prices for meetings or events (as well as management Customer invoice requirements), meeting or event package prices often include meals or accommodation.

As far as the medical industry is concerned, human resource costs account for a large proportion, and the corresponding deductible input tax is limited. This is because the average gross profit rate of the industry is not high, and it requires large-scale advanced medical equipment and high-end medical talents. The medical service industry, which has increased its investment, especially for foreign and private and other social capital investment enterprises, is undoubtedly under tremendous pressure. In order to ensure that the tax burden of all industries will be reduced but not increased, the provisions of the pilot transition policy for replacing business tax with value-added tax have clarified that medical services provided by medical institutions are exempt from value-added tax.

3. Problems faced by the “VAT-to-VAT” reform in the life service industry

The life service industry mainly includes the catering industry, accommodation industry, medical education, housekeeping service industry, laundry and dyeing industry, and hairdressing industry Service industries such as the beauty industry and bathing industry are characterized by dispersed operators and direct facing of final consumers. Regarding the upcoming “business tax to value-added tax” reform, the life service industry faces the following issues:

1. The output tax rate is 6% and the input tax rate is 17%. Will there be a large amount of leftover credits?

< p> 2. Are agricultural products purchased by catering companies not allowed to be deducted from input, or is the input deducted calculated at 13%?

3. Are there different tax rates for dine-in services and takeaways? How to supervise? < /p>

4. Do “free” benefits provided to guests, such as room upgrades, “free” breakfast or wireless Internet access, need to be treated as sales?

5. A large number of restaurants, How to calculate and pay value-added tax if the hotel has incomplete or even no accounts?

Although after the value-added tax is levied in the life service industry, companies can deduct the tax contained in purchased products and services, thus reducing taxes. , but different companies have different degrees of tax reduction due to different values ??and proportions of outsourced products and services. The final change in corporate tax burden depends on the net effect of the superposition of tax cuts and tax increases.