On the sale of goods concurrently engineering and labor service enterprises how effective tax savings

Papers Network: Paper Keywords: tax planning, engineering labor outsourcing equipment

Abstract: the sale of goods and concurrently engineering and labor service enterprises, the performance characteristics of a tax burden that at the same time involved in value-added tax and business tax, and there are some difficulties in the division of mixed sales and concurrently, the complexity of the tax treatment of tax planning space a VAT general taxpayer W sideline engineering and labor service company for the case, through the analysis of its tax burden, tax planning, and to benefit similar situation.

, W Company Profile

W Enterprises located in urban areas, the sale of goods, and also engaged in engineering and labor service, and accounted for separately, the turnover of sales of goods and construction services, and in accordance with the terms of sales of goods subject to VAT to pay sales tax, according to the construction industry labor turnover calculation. in engineering and labor service, will undertake projects subcontracted to a third party outsourcing equipment containing components of the building project. then the addition purchased equipment should be included in the cost of the project is still regarded as sales? differentiated treatment to bring what the impact? following the author for specific analysis, based on tax planning recommendations.

The goods tax treatment of the tax burden - incorporated into the cost of the project, engineering and labor service outsourcing

(Incorporated into the project cost legal requirements

PRC on Business Tax Implementation Rules >> clear in Article 16 provides: In addition to the provisions of Article VII of the present rules, the taxpayer provides construction services (excluding trim labor turnover should include the raw materials used in engineering, equipment and other materials and energy price, including, but not including the purchase price for the equipment provided by the construction side here, the key is to be explicitly included in the turnover of the "equipment" must be used for the project.

(B incorporated into the project cost to bear the tax burden

Purchased a device such as W, and used for the project. Equipment purchase price is 100 million, the 100 × 17% = 17 million to pay VAT when purchased VAT Interim specified, purchased goods for non-VAT taxable items, the input tax shall not be deductible from the output VAT., business tax caused by the device: (100 +17 x 3% = 3.51 million if W is located in urban areas, urban construction tax and education tax additional total: 3.51 (7% + 3% = 0.351 million at the same time, the business tax, urban construction tax and education tax additional corporate income tax deductible as a business tax and additional items: (3.51 +0.351 × 0.25 = .96525 million value Total 100 million worth of equipment into the cost of the project on the impact of the corporate tax burden: increase the tax burden of 3.51 +0.351-0.96525 = 2.89575 million.

Engineering and labor service, the tax treatment of the purchased goods - as the tax burden borne by the sale of equipment

(The legal elements of a deemed sale of equipment

Basic information from the W's, we see purchased equipment not belong to the scope concurrently (sideline sales of goods and taxable services without direct contact and affiliation, but in this case the purchased equipment buildings constitute part, but only based on the mix of sales processing. << People's Republic of China on Business Tax Implementation Rules >> Article VI A sales activity that involves both taxable services and goods involved, a mixed sales activity in addition to the provisions of Article seven (the taxpayer to provide construction services and sales behavior of self-produced goods, shall be accounted for turnover of taxable services and goods sales turnover of taxable services subject to business tax, sales of goods not subject to business tax provisions of enterprises engaged in the production of goods, wholesale or retail, mixed sales activities of the enterprise units and individual industrial and commercial households, as sales of goods and not pay sales tax, other units and individuals of mixed sales activities, as the provision of taxable services had to Article 7 shall apply, subject to business tax Business Tax does not provide construction services at the same time sales of purchased equipment provisions, and therefore does not comply with the provisions of Article VI of the enterprise. http://www.hi138 Links to free papers Download Center com W Enterprises for purchased equipment installed along with the project, does not apply to Article 6, the provisions of Article VII of the application will increase the tax burden on construction services, and inconsistent with the facts (construction and installation labor income is likely to be much above equipment price enterprise engaged in the construction and installation labor practice in the handling of purchased equipment with reference to the provisions of Article VI processing sales and turnover, that is accounted for separately.

(As the tax burden borne by the sale of equipment

If the purchase price of the purchased equipment 1,000,000 W 1,200,000 a price, then the the W enterprises should pay VAT (105-100 × 17% = 0.85 million, the corporate income tax should be paid for (105-100 × 25% = 12,500 in the purchase price for the 100, and are sold on the premise of 105, the device shall be regarded as sales tax burden caused 21,000.

The above analysis is based or Ask 1,000,000, the Ask 105 based on the assumption, then ignore the tax law provisions on the deemed sale or included in the cost of the project, two different processing methods, to reach an equilibrium point when it? The bid-ask spread for what the tax burden borne by the two methods is it?
(X-100) × 17% + (X-100) × 25% = 2.89575 Wan
Calculated X ≈ 106.89 million that the selling price for 1,068,900 yuan, the tax burden consistent handled in two ways. Deemed sales processing method of the burden of the tax burden is heavier when the selling price is higher than 1,068,900, down from 1,068,900 incorporated into the cost of the project's tax burden is heavy, of course, this does not consider the spread income.

Fourth, handled in two ways customers tax burden

Customers reflect the above, we did not consider, after all, the price is jointly determined by the supply and demand sides. Regarded as sales processing, customer purchased equipment input tax can deduct the current output tax, included in the cost of the project, its input tax is included in the cost of construction in progress together, and carried forward in the construction in progress to fixed assets, subject to future annual amortization and decreasing the income tax of the fiscal year if the selling price of the equipment 1,050,000 if purchased device processing, the current input tax deductible 178,500, if incorporated in the cost of construction and equipment depreciation period of 10 years, the residual rate of 5%, the annual deductible corporate income tax of 2.493 (105 × 95% ÷ 10 × 25%, corporate income tax 24.93> 17.85, but considering the time value of inflation and capital 178,500 today than a decade may Total $ 249,300 more valuable decade total deductible. thus visible, regarded as sales prices at a certain level, is beneficial to both the seller and the buyer.

References:

[1] 2011 annual CPA Uniform Examination Textbook Tax [M] Economic Science Press, 2011

[2] Liushu Peng, Chen Yu planning based on the corporate income tax under the new tax law environment [J]. Shandong Business Accounting, 2009, (03)
[3] high Kaiyang tax planning strategies - for example in construction enterprises Xie Zhihua [J]. Financial Services Sector 2010 (12 Links to free papers Download Center http://eng.hi138.com

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