Staff members from the State Administration of Taxation made inspection tours to tax authorities and tax service halls at the grass-roots level on April 20 before the nationwide implementation of replacing the business tax with value-added tax (VAT) on May 1.
County tax service halls will directly face the taxpayers, which is the last link in the process of replacing the business tax with VAT, said Wang Jun, head of the State Administration of Taxation, at the tax service hall in Wangdu county of Hebei province. He stressed that all related work must be completed and ensure that taxpayers benefit from the reform.
After May 1, tax payments on second-hand housing sales will still take place at the local taxation departments, where they pay the former business taxes. VAT tax payment is simple, but the process of dealing with the tax is complicated. The trade information will first enter the price assessment system of local tax departments and then to the VAT management of the state taxation departments, which will delay the invoicing process. Real estate transactions are very active in some cities, where efforts should be made to prevent the invoicing process from slowing down the implementation of VAT, Wang said.
The local taxation department of Gaokai district has taken measures, such as checking traders’ information in advance and filling staffing needs to deal with VAT business, according to Fang Bin, head of the district taxation department in Baoding city of Hebei province.
The State Administration of Taxation is stepping up related software testing to strengthen the integration and linkup of operation systems and monitoring 90 cities with many second-hand housing transactions to ensure a smooth and stable tax conversion.
According to data from the State Administration of Taxation, local tax departments have finished transferring taxpayers’ profiles and information to the state tax departments by April 21, and the state tax departments identified 10 million taxpayers who will get involved in the VAT reform test operation, and completed tax registrations for 90 percent of them.
While talking about the reform, Guo Junduan, director of the Bank of Baoding, said, “We can surely benefit from the bonus of VAT reform.” This year the Bank of Baoding will invest over 80 million yuan ($12.3 million) to upgrade software and hardware systems. Such investment can be deducted as proceeds, which greatly reduce our tax payment, Guo said.
Costs to the real estate industry includes three parts - construction cost, land cost and financing cost, said Xu Erliang, finance director of a real estate company from Lankao county of Henan province. A complete chain of deduction will be formed after the construction, finance and real estate industries are incorporated into the trial operation of replacing the business tax with VAT, and land cost can be deducted by the sales amount. It is very crucial to ease enterprises’ tax burden, Xu said.
The key to reducing industry tax is improving the complete deduction chain, in order to fully benefit from the bonus of tax reform, said Hu Yijian, an expert from Shanghai University of Finance and Economics, stressing the need to maximize the effectiveness of regulations to achieve both enterprise management and social tax administration.