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Several Focus Points of the Adjustment of Resource Comprehensive Utilization Policy [Tax Counseling]
Release time:
10 Mar,2016
The "Notice of the Ministry of Finance and the State Taxation Administration on Issuing the Catalog of Value-Added Tax Preferences for Resource Comprehensive Utilization Products and Services" (Cai Shui [2015] No. 78) has been implemented for nearly half a year. The preferential catalog lists a total of 41 specific comprehensive utilization resource names, product and service names, their technical standards and related conditions, and tax refund rates, categorized into five categories: co-produced and associated mineral resources; waste residue, wastewater (liquid), waste gas; recyclable resources; agricultural and forestry residues and others; and resource comprehensive utilization services. Due to the large number of items in the catalog (some items are newly added or reclassified, and some item contents have been significantly adjusted), taxpayers need to make careful distinctions by referring to the preferential catalog in conjunction with their own business operations, based on their understanding of the spirit of the document. This article will simply review the changes and adjustments in the policy using a few resource comprehensive utilization matters as examples, hoping to help taxpayers accurately understand and enjoy tax preferences.
1. Unified adjustment to enjoy the value-added tax immediate collection and refund policy
Document No. 78 unifies and integrates the value-added tax exemption, immediate collection and refund, and post-collection refund policies classified in Cai Shui [2008] No. 156 and Cai Shui [2011] No. 115. That is, taxpayers selling self-produced resource comprehensive utilization products and providing resource comprehensive utilization services shall implement the value-added tax immediate collection and refund policy. Compared with direct tax exemption, immediate collection and refund is a refund after the normal payment of value-added tax. For some enterprises that previously enjoyed the value-added tax exemption policy, this means that they can issue special value-added tax invoices for their sales, and the purchasers can also use the invoices for input tax deduction, maintaining the integrity of the value-added tax calculation and deduction chain. Taking an enterprise that uses waste residue as raw material to produce building blocks as an example, assuming that it meets the conditions for resource comprehensive utilization before and after the policy adjustment, the building blocks sold previously could only issue tax-exempt ordinary value-added tax invoices, while after July 1, they can apply for and fill out 17% value-added tax special invoices. When filing tax returns, the enterprise shall fill in the corresponding columns for immediately collected and refunded taxable goods and services and taxable services, and calculate the input and output tax amounts.
2. Pay attention to changes in technical standards (waste utilization rate) and tax refund rates
The new resource comprehensive utilization policy has made many adjustments to technical standards and related conditions, and tax refund rates. The raw material ratio requirements for some waste utilization products have been increased, and the tax preference rate has decreased. When the conditions for tax reduction and exemption change, taxpayers should report to the tax authorities within 15 working days from the date of the change. If they no longer meet the provisions of the preferential policy, they should stop enjoying the preferential policy.
The following two cases are examples: 1. Specific building materials products with a waste residue proportion of no less than 30% in the production raw materials. Specific building materials refer to "bricks (excluding ordinary fired bricks), blocks, ceramsite, wall panels, pipes, concrete, mortar, road manhole covers, road guardrails, fireproof materials, refractory materials, insulation materials, mineral (rock) wool". Cai Shui [2008] No. 156 originally exempted the value-added tax on the sale of such self-produced goods. Document No. 78 added "microcrystalline glass and U-shaped glass" to the specific building materials products, and adjusted the proportion of waste residue in the product raw materials to 70% or more, changing the exemption policy to an immediate collection and refund of 70%. 2. Industrial oils such as lubricating base oil, gasoline, and diesel produced using recycled waste mineral oil as raw materials. Cai Shui [2011] No. 115 originally required production enterprises to obtain a "Comprehensive Operation License for Hazardous Waste", and the proportion of the above-mentioned resources in the production raw materials should be no less than 90%. Document No. 78 maintains the waste utilization ratio unchanged, adds the requirement that taxpayers must meet the technical requirements of the "Technical Specifications for Pollution Control in the Recycling and Utilization of Waste Mineral Oil" (HJ 607-2011), and changes the original value-added tax immediate collection and refund of 100% to 50%.
3. Pay attention to taxpayer credit rating and environmental emission standards
To apply for the value-added tax immediate collection and refund policy for resource comprehensive utilization, the taxpayer credit rating should not be C or D level as assessed by the tax authorities. According to the "Tax Credit Management Measures (Trial Implementation)" and "Tax Credit Evaluation Indicators and Evaluation Methods (Trial Implementation)" of the State Taxation Administration, the taxpayer credit level has been evaluated annually since 2015, and its socialized application is becoming increasingly widespread. It is foreseeable that in the future tax preference field, more policies will be introduced or adjusted based on the taxpayer credit rating as a prerequisite for enjoyment. On the other hand, although the "Notice of the Ministry of Finance and the State Taxation Administration on the Implementation of Pollutant Emission Standards by Taxpayers Enjoying Value-Added Tax Preferential Policies for Resource Comprehensive Utilization" (Cai Shui [2013] No. 23) was repealed with the implementation of the new policy, taxpayers should still pay attention to the provisions of Article 4 of Document No. 78: "Taxpayers who have enjoyed the value-added tax immediate collection and refund policy stipulated in this notice and who are penalized for violating tax laws and regulations or environmental protection laws and regulations (except for warnings or fines of less than 10,000 yuan) shall not enjoy the value-added tax immediate collection and refund policy stipulated in this notice for 36 months from the next month after the penalty decision is issued."
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