VAT Is To Expand Around Impact On Manufacturing Enterprise C's

From January1st,2012, Shanghai transportation and modern service industrywillpay VAT replacing business tax. The main content of thereform is adding lowlevel tax rate of11%and6%on the basis of the current VAT rate of17%and13%.The transportation industry apply to low tax rate with11%, research and developmentand technical services, modern cultural and creative, logistics and consulting servicesapply to tax rate6%. After six months of new tax policy implementation in Shanghai,the Ministry of Finance and the State Administration of Taxation issued a notice inJuly31st,2012, the transportation and part of the modern service industry in Beijingand other provinces shouldlevyvalue-added taxreplacingbusiness tax. The workoftaxation convertingshould be completed till September1st,2012. Although this taxtransition is focus on transportation and modern service industry, manufacturingenterprises as the upstream and downstream enterprises of service industry,they willbe impactedby the reform. This paper tries to analyze the testing industryand analyzethe impact ofmanufacturing company-Company C which the author employed. We tryto raise some issue and provide corresponding improvement recommendations. Thatwillmake Company C to play the positive role of tax reform.Theoverall framework is unfolded as follow.The first chapter illustrates the background and target of the study, followed bypointing out the meaning and ideas, the may-be originalities and shortcomings.The second chapter does a literature review and VAT expanding background,illustrates the amending trends of policies, thus to pave the way for the discussionbelow.The third chapter introduces the background of Company C, includingthebusiness scope, major suppliers and customers, current status, outlook and so on.The fourth chapter analyzes the several pilot industries in the tax reform whichhas transactions with company C, using financial data to calculate company’s gain asa result of tax reform.The fifth chapter summarizes the studying result, look through whether company Chas done fully preparation for the tax reform, whether we have gotten the benefit fromthis opportunity. And then raise some issues. The sixth chapter provides further suggestions for improvement in processmanagement, invoice management, personnel management area.The seventh chapter is conclusion.The main conclusions are:(A) General taxpayer enterprises or large-scale enterprises get more benefit in the taxreform, and the more operating costs proportion of operating income, the morebenefit. For small-scale taxpayers, as the applicable tax rates is not changed verymuch after tax reform, so the beneficial effects are not obvious. But tax reform willstimulate the development of small-scale enterprises.(B) Ifthe enterprise wants to purchase the fix assets, it is better through financeleases, the cost will be smaller than purchasing.(C) After VAT replacing business tax, when enterprise purchases service, the VATon purchase can be deducted from VAT payment. Thus, the tax reform will helpreduce operating costs. At the same time, VAT decreasing also helps to reduce urbanconstruction tax and educational expenses. Thus it contributes to enhance the overalllevel of profits. VAT expanding will reduce the tax burden of enterprises. Benefit fromthe fiscal tax cuts, increase profits, corporate liquidity and adequate cash flow,simulate investment, that will help the enterprise developed bigger and stronger.