Plant oil and other industries tried to offset agricultural product VAT

The Ministry of Finance issued the "Notice on the Trial Measures for Determining the Tax Deduction for Input Taxes on Agricultural Products Value Added Tax in Selected Industries". Since July 1st, the value-added tax for the production and sale of liquid milk and dairy products, wine, alcohol and vegetable oil from raw materials purchased as raw materials The taxpayer carried out the pilot deduction for the VAT input tax of agricultural products.

The agricultural product processing industry will benefit from it. The finance and taxation department said that after the pilot, the VAT burden on agricultural product processing companies will be greatly reduced, which will help encourage the value-added of agricultural products processing and promote the development of the agricultural product processing industry. The reporter learned that in the future, in accordance with the principle of “difficulty and difficulty”, pilot projects will be gradually pushed forward in other agricultural products.

There has been a long history of purchase of agricultural products no longer starting from offsetting input tax credits for agricultural products. It is understood that when purchasers of agricultural products currently purchase tax-exempt agricultural products, since producers of agricultural products themselves are exempted from value-added tax, purchasers can issue their own purchase invoices for agricultural products and use them as deduction vouchers to offset their input tax amounts.

According to the State Administration of Taxation, the input tax calculated by the current method is actually a kind of virtual input tax, which is in essence the implicit subsidies granted by the state to agricultural product processing and distribution companies through taxation methods to support enterprise development. Regarding the above-mentioned mechanism, the General Administration of Administration stated that some unfavorable factors in the actual implementation of “self-initiated deductions” have been gradually reflected, mainly resulting in the failure of the chain mechanism of VAT sequestration and taxation that restricts the purchase and sale of both parties and triggering a large number of fraud cases.

The "Notice" stipulates that in the future, if the pilot taxpayers use the purchased agricultural products as raw materials to produce goods, the VAT input tax for agricultural products may be assessed in accordance with the input-output method, cost method or reference method.

The input-output method focuses on the control of the consumption of agricultural products, while the cost law focuses on the control of the consumption of agricultural products. The tax authorities shall verify the two methods based on the monthly sales of goods, the average purchase price of agricultural products, the deduction rate of input tax for agricultural products, and the monthly operating expenses of main products, and the deduction rate of input tax for agricultural products.

For the circulation enterprises that pilot taxpayers purchase direct sales of agricultural products, the deduction standard is mainly determined by the sales volume control method. The taxpayer calculates the current allowable deduction according to the monthly sales volume of agricultural products, the average purchase price of agricultural products, and the deduction rate of input tax for agricultural products. The amount of input tax for agricultural products.

The State Administration of Taxation on the reduction of tax burden for processing enterprises stated that in the future, on the one hand, the preferential policies for the exemption of value-added tax for agricultural producers selling agricultural products on the one hand should be continued; on the other hand, the original self-opening and self-deferring practices should be changed, and the deduction of agricultural product purchase invoices should be abolished. The function not only eliminates the taxpayer's motive for opening purchase invoices from the source, but also strengthens the reasonable control over the authenticity of the taxpayer's offset input tax.

In addition, after the pilot project, the value-added tax burden of agricultural product processing enterprises will be greatly reduced in the future, which will help encourage value-added processing of agricultural products, increase international competitiveness, and promote the development of the agricultural product processing industry.

For the problems that may arise in the future pilots, the State Administration of Taxation has also forecasted that the adoption of the input deduction method for agricultural product input tax after the pilot project requires the calculation of the deduction standard based on the data recorded by the taxpayer’s financial data and the third-party data held by the tax authorities. There will be issues such as inconsistent ratification criteria and unfair tax treatment. In response, the State Administration of Taxation stated that it will adopt a series of countermeasures, including the implementation of collective trial customization at various levels of pilot tax authorities.