“deeply reforming vat to reduce the current rate of 16 per cent in manufacturing, etc. To 13 per cent, ensuring a significant decline in the tax burden of major industries.” the news of the tax cuts in the report of the government has suddenly given rise to much debate in the industry concerned. At the new zealand conference on the reading of the report on the work of the government, the director of the research office of the state council stated that the tax reduction was more than 20 per cent. Some experts have called this the largest tax reduction in history。
Most segments of the electricity sector are in the former 16 per cent tariff range. The tax cuts were undoubtedly a timely rain for the electricity sector, which faced challenges such as low-cost electricity, increased competition in the market, and low-cost access to wind power. Can power companies really get on board? Industry experts have estimated that this reduction will bring about a reduction of more than 65 billion yuan in the electricity sector, which will play an important role in driving the transformation of enterprises to quality and in promoting the restructuring and distribution of industries。
The tax cuts actually cost the firm less
Driving business transformation upgrades
How large a reduction in the electricity sector would be achieved by a 3 percentage point reduction in the value-added tax rate? This has been measured by industry enterprises and a number of securities firms。
According to the national credit securities measurement data, in 2018, the national congress announced a reduction in the mva rate from 17 per cent to 16 per cent, and the implementation of a set-off policy for grid enterprises could reduce the general commercial price of electricity by 2. 16 minutes/kwh. This year, the value-added tax fell by a further 3 percentage points and the average commercial and commercial electricity price could be reduced by about 5 cents/kwh, resulting in a price reduction of 52. 5 billion yuan。
This year's report of the government calls for a further 10 per cent reduction in the price of electricity for business in general. The total price reduction task is estimated to be approximately $73. 5 billion. Thus, the reduction of the available space for grid enterprises, even if fully used for the real economy, is far from sufficient to support the task of reducing the price of electricity。
The reduction in the value-added tax rate is expected to improve the performance of the fire power, as a result of a weather security analysis that in 2018, the power losses were over 50 per cent and did not have the capacity to make a profit。
“tax cuts will be effective in reversing the current deficit in power-fired operations and in increasing the profitability of enterprises and market competitiveness.” the national councillor, general manager of the national energy investment group, has indicated。
Industry analyses suggest that the specific effects of lower vat rates also need to be taken fully into account with regard to the issue of in-kind tax credits, “if the ratio of in-kind taxes is reduced, there will be no tax incentives.” the case law of senior electricity experts。
For wind, photovoltaic and wind-light projects, value-added tax (vat) is generated mainly at the equipment acquisition and power-sale chains, with adjustments to vat resulting in lower entry taxes on equipment purchases and higher prices for electricity sales without taxes, thus increasing the overall returns to the project。
This tax reduction will reduce the burden on enterprises in the immediate future and enhance their confidence and resilience to risk. In the long run, it will help to boost the momentum behind enterprise development, optimize the structural layout of industrial enterprises, upgrade their transformation and accelerate progress towards high-quality development。
According to the national councillor, the chairman of the eastern electrical board and the secretary of the party, the electricity and equipment manufacturing industry is currently accelerating its transition to innovation-driven and the market is highly competitive. The report on the work of the government reveals a wealth of good business information, including tax cuts and reductions, support for the upgrading of traditional industries and technological innovation, and the upgrading of technological support capabilities, all of which point to the pain of the current manufacturing industry. High-quality development of equipment manufacturing enterprises should highlight technology orientation, innovation drive and lead firms in productive research and development。
At the two national press conferences, the chairman of the standing committee of the national political council and chairman of the jung-tai group, shin kuang nam, stated that lowering vat rates and taxing expenditures would increase the cash flow of enterprises, lead to the transformation of enterprises into advanced, high-tech and value-added manufacturing industries, enhance the capacity of enterprises to invest in research and development in science and technology in the long term, increase the dynamism of enterprises and promote high-quality economic development。
In addition, we are not affected by this reduction in value-added tax (vat) due to the 3 per cent rate applied to small hydropower for individual projects with installed capacity of less than 50,000 kilowatts (kw); the 13 per cent vat rate applied to hydropower stations with installed capacity of more than 50,000 kilowatts (kw) and above for individual projects; and the immediate withdrawal policy of over 1 million kilowatts (kw) of their actual vat tax of more than 12 per cent. The tax cuts have had a limited impact on the hydroelectric sector。
The nuclear power industry has implemented a unified vat first-in-first-in-first-out policy for 15 years from the date of the formal commercial start-up of the nuclear power plant, with the rate of return declining at 75 per cent, 70 per cent and 55 per cent, with nuclear power companies benefiting from this reduction。
It's still difficult for new energy companies to reap the tax bonus
Call for further bias in tax cuts
The tax cuts focus on inclusive and structural combinations and are intended to address the challenges of related industries in a targeted manner. However, because of real problems such as industry characteristics, firms in some areas are not able to benefit from the tax reduction dividend immediately, and more industry-oriented tax cuts are still needed. At both meetings, the members of the commission were represented by a number of photovoltaic companies。
“photovoltaic power plants are heavily invested in the front, with a long return on investment and a 25-year life-long design system, with investment gradually recovered from years of revenue from electricity generation sales. From a financial point of view, it takes between five and six years for a general photovoltaic power station to receive a credit to pay vat. But our national photovoltaic power has only begun to develop on a real scale since 2013, and from 2014 to 2018 is a high-speed period of development. It follows that only a very small number of well-run businesses are likely to benefit from tax concessions, which most do not enjoy in practice.” liu han won, representative of the national people's congress and chairman of the tungwei group board of directors, indicated。
Indeed, in order to support the development of new energy sectors such as wind power and photovoltaics, the state has long been inclined towards tax policy. The ministry of finance, the general directorate of state taxes issued a circular on the value added tax policy for photovoltaic electricity in september 2013, which introduced a 50 per cent policy of value added tax (vat) on revenues from photovoltaic electricity generation, which was renewed in 2016 and ended on 31 december 2018. As a result of the inflow of tax credits, most skin-voltaic enterprises did not benefit from the dividends of the policy. As a result of this downward revision of the vat rate, the same problems continue to be faced by photovoltaic enterprises。
According to liu han won, the tax burden is one of the most important reasons preventing industries from having access to the internet at a price that does not require subsidies, under genuine market conditions and in order to sustain healthy development. He explained that the tax on the burden of electricity per hour amounted to 0. 13 ~0. 17 from the pv end alone. At the same time, photovoltaic power is a heavy asset input, and most projects retain large end-of-cycle tax credits, which, according to incomplete statistics, represent more than 10 per cent of the investment cost of the photovoltaic plant from the project start-up. Our policy of refunding vat credits at the end of the period is applied to grid enterprises, which are not covered by the reimbursement. Industry estimates that non-technical costs such as taxes and fees and financing costs account for about 25 per cent of the total cost of photovoltaic power generation。
As a result, the representative of the photovoltaic industry recommended that the state implement a more industry-oriented tariff reduction policy。
At the two meetings, liu hanwon presented a proposal to reduce the tax burden on photovoltaic companies and recommended that the photovoltaic project be included in a simple collection rate of 3 per cent, in line with the value added tax policy for small hydropower projects. Accomplishment of a tax on the interest cost of an enterprise may be offset and the pv generation enterprise may be added to the tax refund at the end of the vat period. Tax exemption for income tax on photovoltaic-free projects。
At both meetings, the skf presented a proposal for further refinement of the value added tax (vat) preferences for photovoltaics. Similarly, a 3 per cent value added tax (vat) is recommended for photovoltaic plants with installed capacity below 50,000 kilowatts (kw) compared to small hydropower. It was also recommended that the 50 per cent preferential policy of value added tax (vat) on photovoltaics be continued and that long-lasting mechanisms be developed without time constraints. Under the model of vat overtax returns for large hydropower stations, preferential vat overtax returns are applied to renewable power enterprises such as photovoltaics. I'll be back in a minute
