For a long time, my country’s renewable resource recycling industry has been fragmented and irregular. There are many small, scattered and chaotic mobile vendors and informal enterprises in the industry. Since individual industrial and commercial tax procedures cannot be established, these traders and informal enterprises can purchase renewable resources from waste producers at higher prices without issuing formal bills. The two price systems of “no fare” for informal recycling companies and “with fare” for formal recycling companies directly cause the living space of formal recycling companies to be squeezed, triggering the phenomenon of “bad companies driving out good companies”.
Who will pay for the risk of industry taxation?
Corporate income tax deduction risks: recycling companies have no input costs and are recorded with self-made vouchers. The pre-corporate income tax deduction vouchers are missing, and companies mostly calculate gross profits with a 4% profit margin. , and pay 1% corporate income tax based on the 25% income tax rate. Irregular costs create hidden dangers for enterprises and tax management. They also facilitate the transfer of profits by waste plastic production companies and provide the ground for various types of fund payments that are illegal and illegal.
Value-added tax invoice supply risk: Since the recycling company does not have input invoices, it cannot prove the quantity of purchased goods. If invoicing is restricted, the business operations will be interrupted; if not If restrictions are imposed, it will easily lead to false issuance or issuance of special invoices on behalf of others, and it will also increase the risks of the tax authorities.
Personal income tax collection risk: Since the recycling company pays the individual recycling funds without obtaining a combined invoice nor paying personal income tax, it results in de facto tax evasion; at the same time, it also There are large amounts of public-to-private business, which further raises issues such as capital supervision.
The above three risks bring about three problems:
First, the problem of tax collection and administration. Suppliers in the renewable resources industry are mainly natural persons. Suppliers do not provide VAT invoices, so there are difficulties in VAT collection and management at the source.
The second is the difficulty of proving business authenticity. Due to the flexible sales of natural persons and direct cash transactions, the information on the goods is incomplete and the process is unclear, making it difficult to supervise the actual transactions.
The third is the difficulty in negotiating input and cost, and the tax risk is relatively high. The input vouchers and basis for renewable resource recycling enterprises are mainly self-made vouchers. Currently, the tax authorities no longer recognize the self-made vouchers when determining corporate income tax costs. It is difficult to confirm the authenticity of VAT inputs and income tax costs. At the same time, the recycling personnel have not paid individual taxes. In fact, tax evasion.
The industry value-added tax chain is broken, “bad companies drive out good companies”?
Generally speaking, the renewable resources industry chain mainly includes four links: waste recycling, processing, granulation and reuse.
First, waste pickers, residents, and companies sell the waste materials picked up or produced by themselves to individual recyclers in the community;
Secondly, individual recyclers in the community sort and roughly sort and sell to fixed recycling stations or mobile recycling trucks with transportation and storage capabilities;
Third, recycling stations or mobile recycling trucks will centrally transport the classified waste materials to distribution markets or sorting centers for physical processing such as sorting, packaging, and impurity removal;
Finally, large-scale recycling companies carry out unified purchasing and sales to various sorting centers and markets, and sell to waste companies.
In the whole process, a four-party renewable resource recycling chain system has been formed: retail waste material recycling – packaging stations – large resource recycling companies – renewable resource utilization companies.
Most renewable resources come from two sources: one is residents and traders, and the other is industrial waste and individual practitioners. Since neither of them can issue compliant value-added tax invoices, the value-added tax chain between retail waste material recycling and packaging stations is broken. At the same time, when conducting renewable resource transactions, large resource recycling companies require packaging stations to provide special value-added tax invoices. , otherwise no transaction will be performed. This shows that the value-added tax chain in the renewable resource recycling industry is indeed broken.
The result of the broken value-added tax chain in the renewable resource recycling industry is that packaging stations and large resource recycling companies bear the payable value-added tax, which ultimately manifests itself as renewable resources The tax burden on the recycling industry is too great. Since there are many small and scattered mobile vendors and informal enterprises in the recycling of renewable resources, these mobile vendors and informal enterprises do not have to pay taxes and have lower recycling costs. They raise prices to purchase renewable resources from waste producers, forming an informal The two price systems of “no fare” for recycling companies and “with fare” for formal recycling companies have squeezed the living space of formal recycling companies. Many companies have stopped production or changed careers, triggering the phenomenon of “bad companies driving out good companies”.
In the end, the renewable resource recycling industry showed the distinctive characteristics of “concentrated and formal downstream, decentralized and chaotic upstream”.
The tax burden is too heavy, and the key to solving the problem still lies in the optimization of top-level design
In fact, As early as 2001, the Ministry of Finance and the State Administration of Taxation adopted the “Notice on Value-Added Tax Policies for Renewable Resource Recycling Businesses” to explore and solve this problem. It is stipulated that the sales of renewable resources purchased by renewable resource recycling business units shall be exempted from value-added tax; general taxpayers of production enterprises may purchase renewable resources according to ordinary invoices.10% of the stated amount will be deducted as input tax. This policy lasted for 7 years and was eventually canceled due to various reasons.
In 2015, the two departments issued the “Catalogue of Value-Added Tax Preferences for Products and Services Comprehensive Utilization of Resources” (abbreviation: Document No. 78). Since the implementation of Document No. 78 , some enterprises have reported that in some areas there is a phenomenon of “tax collection without refund” or tax refund is not timely. Since the catalog of “No. 78” does not comprehensively list industrial solid waste, some local tax authorities have not listed in the catalog. Industrial solid waste products are not eligible for the policy of 70% VAT rebate, which makes the final actual tax burden of enterprises as high as about 16.5%, significantly increasing costs.
Compliance operations have “extremely high tax burdens” and trying to avoid them involves huge tax-related risks. How to solve the problem has become the focus of discussion among industry insiders. Everyone hopes that the government can come up with a top-level design, solicit suggestions and opinions from industry insiders through multiple channels, and solve this problem as soon as possible.
National People’s Congress Chairman Fang Min: Implement tax exemption policy for the renewable resource recycling industry
She suggested that “the state should abolish the collection of value-added tax or value-added tax on the renewable resource recycling industry, especially for companies that recycle renewable resources in the domestic waste field. Implement the policy of full exemption of value-added tax first and then later to encourage and support its development policy.” Fang Min suggested that relevant national departments should jointly conduct research and issue policies and regulations to encourage and support the development of the renewable resource recycling industry.
CPPCC member Li Jinghong: Increase policy support for waste plastic processing companies
On the one hand, we will further reduce taxes on waste plastic recycling companies, increase tax refunds on the original policy of 50% tax refund, and at the same time, change the tax refund system Favor downstream plastic product companies that use recycled plastics, and encourage companies to use more recycled materials through tax rebates while ensuring product quality.
Observer Jun wants to say
Renewable resources recycled by residents and other individuals can be transferred For renewable resource recycling objects, the tax bureau authorizes packaging stations to issue value-added tax invoices on their behalf. However, during operation, individuals must undergo real-name authentication. Any illegal operations will affect personal credit reporting. For industrial waste and individual practitioners, both must pay VAT as required. If you consider that the tax burden is too high, you can choose a compliant tax subsidy platform.
For compliant recycling companies, the state should accelerate the implementation of preferential policies such as value-added tax and income tax for comprehensive resource utilization products to ensure compliance with industry standards. Announced enterprises with certain conditions can fully enjoy the preferential tax policies, narrowing the gap in policy enjoyment among regional industry enterprises; increasing support for leading enterprises in the renewable resources industry, and driving the industry to develop in the direction of standardization and centralization.
In short, the country should carry out top-level design for the prevention and control of plastic pollution and launch comprehensive rectification actions. A full-process pollution prevention and control system and a top-level design plan should be established as soon as possible, focusing on the construction of a plastic waste recovery and recycling system, achieving cascade matching, implementing policies in accordance with aptitudes, and coordinating the actions of various ministries and commissions.
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