F Company Decoration Project Cost Management Optimization In The Business Tax-to-value Added Tax Context

The full implementation of the policy of replacing business tax with value-added tax is an essential approach to pressure enterprises to improve their management and realize industrial upgrade.The insufficient input VAT deduction of some architectural decoration enterprises,with the implementation of replacing business tax with value-added tax,leads to the increase in tax burden and project cost.Therefore,how architectural decoration enterprises optimize and upgrade their project cost management is directly related to their profitability and development prospects.This paper is structured as below.It began with literature review on the cost optimization of projects before and after the implementation of replacing business tax with value-added tax.Then,it looked into the architectural decoration project cost structure and change,the differences between business tax and value-added tax among other things.Our investigation revealed the current state and problems of the cost management of the architectural decoration project of F Company since the implementation of replacing business tax with value-added tax.To tackle the knotty problems,we established a model in line with the logic of the cost management of architectural decoration projects.Through this model,the tax burden of the architectural decoration enterprise before and after the implementation of replacing business tax with value-added tax was compared and contrasted.With a mathematical model,mathematical tools were also employed to detail the approaches for optimally managing material expenses,labor cost,machine cost and management fee.Meanwhile,the actual cost data of F Company’s decoration project was taken as a case to make objective calculation and analysis of the impact of the deduction factor of the input VAT on the payable VAT.Finally,measures were proposed for improving the cost management of F Company and the expected effectiveness of relevant measures was inferred too.It was found that,after the implementation of replacing business tax with value-added tax,the following three aspects are critical for the project cost management of architectural decoration enterprises.First,importance should be attached to the management of procurement invoices,especially that of raw material procurement.Second,priority should be given to the cooperation with general taxpayers.Third,attention should be paid to weighing the relationship between self-sufficiency,equipment leasing and equipment purchase.To an enterprise,labor outsourcing is necessary only when outsourcing cost is lower than its self-completion labor cost.In the case of equipment purchase or leasing,an optimal choice cannot be made unless the VAT deduction factor is incorporated for evaluation.Our case study indicated that when well-proportioned VAT-specific invoices can be obtained for raw material purchase,equipment leasing and office expenses,the input VAT deduction will increase by a large margin.This will help enterprises lower their business cost and tax burden.It was proved that when raw materials account for over 60% of the overall project cost,the input VAT deduction of raw materials is the key to the decrease of payable VAT.As the findings of the case study indicate,to optimize and upgrade cost management,F Company is expected to adopt a sound cost management system to facilitate the close cooperation between business personnel and financial personnel,overcome the information islanded effect,surmount management barriers within the enterprise,and strengthen its organization and management.