The Impact On The Cost Due To Replacing Business Tax With VAT In China’s Real Estate Enterprises

Since May 1,2016,China has changed its business tax into VAT to promote the final four industries of "construction,real estate,life services,modern services" in an all-round way,opening up the VAT deduction chain in an all-round way,which has an important impact on the production and operation of most enterprises.The real estate industry is an important part of China’s national economy and a pillar industry.The impact of comprehensive reform and reform on the real estate industry is self-evident.The purpose of this paper is to reveal the impact of the policy change on the cost of real estate enterprises and its constituent factors through the analysis of the impact of the substitution of tax pattern on the cost of real estate enterprises,so as to provide reference ideas for real estate enterprises to reduce various costs.This paper holds that: due to the impact of non-deductible VAT in loan interest on the financing cost of real estate enterprises,how to incorporate the land cost into the deduction chain,the choice of construction project contracting and material supply mode,the deduction time point of input invoices obtained by real estate enterprises,and the deduction time point of value-added tax paid in advance of sales income will all affect the tax burden and the deduction time point of real estate enterprises.Development cost affects the financial data of balance sheet and profit statement,and then affects the enterprise value of real estate enterprises.This paper takes Wanda Group’s real estate sector as the object of analysis.Firstly,it introduces the industry situation of Wanda Real Estate sector and the cost control situation of Wanda Real Estate sector.It points out that focusing on cost control is an important guarantee for Wanda Real Estate sector to develop rapidly and obtain good economic benefits.Then it analyses the problems faced by Wanda Real Estate sector with the implementation of new tax policy in 2016.Some of these problems are mainly manifested as the increase of tax burden,which is demonstrated in the fact that the taxes involved in interest due to high liabilities that can not be deducted,and the value-added tax of some purchased materials that can not be deducted.Faced with the problems brought by policy changes,the main countermeasures of Wanda Group’s real estate sector are multi-channel financing,changing the way of land acquisition,adopting favorable construction contracting and material procurement,changing the way of sales,etc.These measures are very targeted and have produced very good results rapidly.The main manifestations are that the financing cost has not increasedsignificantly,the amount of deductible land cost has been expanded,more deductible material input tax has been obtained,and the capital time value of deductible and deductible tax has also been well done.By introducing the experience,solutions and effects of the case company,we can conclude that the tax burden of real estate enterprises in China will indeed increase in the implementation of the replacing of the business tax with a value-added tax,but enterprises can still do something.There are many inspirations from the case company,specifically the following points.Firstly,enterprises must attach importance to the updated tax policy.The long-term impact of tax burden is that when the tax policy environment changes,we should not complain negatively,but actively study policies and regulations,and on this basis,we should try our best to use policies legally and reasonably to reduce tax.Thirdly,we should consider reducing tax burden from various dimensions such as project design,material procurement,business outsourcing,and not only pay attention to invoices and sales.Fourth,the time value of VAT should not be neglected in tax planning.When the sales scale and capital scale of enterprises are large,it is very valuable to obtain the deductible amount of VAT as soon as possible.The main disadvantage of this paper is that the real estate industry is only selected research object,and the experience of the real estate industry is difficult to learn from all the enterprises affected by the policy of operation and increase;moreover,this topic has a strong timeliness,in the case of the delays in the written documents,the reference significance of the paper is discounted,but I believe that the practice of the example company for some real estate enterprises.Still,it has some reference value.