Interpretation: the butterfly effect caused by the "reform of the camp" in the telecom industry

Since the pilot of “reform of the camp”, it has only been a matter of time before the telecom industry has been included in the “reform of the camp”. On April 30, with the notice from the Ministry of Finance and the State Administration of Taxation, the telecom industry’s “reform of the camp” has finally landed. According to the "Notice on Bringing the Telecommunications Industry into the Pilot of VAT Reform for Business Taxes", starting from June 1st, pilot the reform of the business tax of the telecommunications industry in China, and implement the differentiated tax rate, basic telecommunications services and value-added telecommunications services respectively. The tax rate of 11% and 6% is applicable, and the provision of telecommunications services for overseas units is exempt from VAT.

The original intention of “reform of the camp” was to eliminate the double taxation and open up the deduction chain of the secondary and tertiary industries, realizing the transition from “road taxation, full taxation” to “ring deduction, value-added taxation”. . As of the end of last year, the number of pilot households increased 1.6 times year-on-year to 2.7 million enterprises, and the annual tax reduction scale exceeded 140 billion yuan.

As a typical service enterprise, telecom operators have a lower proportion of deductible input costs, and the cost reduction is much lower than the decline in revenue, resulting in a decline in profits and an increase in tax burden. In addition, the characteristics of the VAT difference taxation and the same sales are great tests for the operator's existing marketing model and support system.

At the same time, industry insiders said that the telecom industry is a typical scale economy. The short-term tax burden brought by the “reform of the camp” is only a surface impact. Further, the “reform of the camp” tests the operator’s business structure. Transformation of business model and financial system.

put off

Under the strong promotion of the country, there is no suspense in the telecommunications industry to include “camp reform”. In April 2013, the State Council executive meeting decided to take the opportunity to include the railway transportation, post and telecommunications and other industries into the “competition and reform” pilot. Since August 1 last year, the pilot camp has expanded to the whole country, and the pilot industry has expanded to radio and television. Services, railway transportation and postal services. The report on the draft budget submitted for consideration at the two sessions this year proposes that the telecommunications industry will be closely involved in the policy of “increase in the reform of the camp” and strive to implement it on April 1 this year. However, on June 1, 2014, the telecom industry's “battalion change” plan has been postponed for two months.

The telecom industry's "reform of the camp" has been delayed, and it is reported that it is mainly due to the long-term disunity of the opinions of the finance and taxation department and the three telecommunications companies.

In fact, since April 2012, the three major operators have established joint working groups and continue to report to relevant ministries and commissions to obtain preferential policies. In an internal analysis of a telecom operator, this statement “actively cooperates with the reform of the national tax system, participates in the initiative, conducts active research, communicates and reports to the fiscal and taxation departments, strives for strong policies in the industry, and reduces the adverse impact on the company.”

According to this material, the preferential policies to be won by the telecommunications industry are mainly reflected in the three aspects of reducing the taxation of sales, increasing the deduction of input and optimizing the mode of collection and management. Including 6% tax rate or value-added services and Internet business in the whole industry; avoiding the same sales including self-owned services, physical and points exchange for own services; net taxation or non-taxation; increase construction and installation industry Synchronous pilot industries, such as social channel agents and telecommunications, etc.; approved deductions, including utilities and channel fees.

According to the documents of the Ministry of Finance, the operators have previously sought only the telecom industry services presented in the form of point redemption, and no VAT is levied. A mobile person said that despite this, for the promotion of mobile phones, it is not clear whether it is defined as sales.

Falling profits

The impact on the operators after the implementation of “Calculation Reform” involves revenue, marketing, internal management and industrial chain cooperation.

The decline in profits and the increase in tax burden have become a consensus. According to industry experts, compared with other industries, the telecom industry accounts for a lower proportion of total assets in the financial indicators, while fixed assets and intangible assets account for a higher proportion. Since the “value-added rate” of the tax burden after the “business reform” is determined to be inversely proportional to the material consumption rate and directly proportional to the profit rate, the telecom industry may face a temporary increase in tax burden in the short term.

Both China Mobile and China Unicom have issued relevant responses, saying that profits will decrease after the “reform of the camp”. China Mobile announced that since the value-added tax is a separate price tax, the operating income will be reduced accordingly, and the VAT input tax deductible from the current cost and capital expenditure of the company. Less, such as depreciation and amortization, labor costs and other projects can not be deducted, operating expenses and capital expenditure will be slightly reduced, so short-term profits are expected to be greatly negatively affected. According to the announcement, in the short-term, after the implementation of the “Calculation Reform” policy, the company's main business will be included in the “VAT Reform” pilot category, and the company's operating income will decline.

In addition to the impact of profits, telecom operators' operating income, tax management, marketing model, and procurement will all be affected. A mobile related person said that the huge challenge brought by the “reform of the camp” affected all management levels and various majors of the headquarters, provinces, prefectures and counties.

After the “reform of the camp”, the existing marketing model poses a major challenge to operators. In order to enhance the user's stickiness, telecom operators often use promotional methods such as sending mobile phones and sending calls. Under the business tax system, the tax is paid according to the actual operating income, and under the VAT system, the principle of illicit sales is adopted: even if the actual income is not obtained, the taxable service or the transfer of ownership of the goods will still be subject to VAT.

For example, the customer pre-stores 1,000 yuan of phone bills and sends one mobile phone worth 800 yuan. Before the “reform of the camp”, the tax payable = 1000 & TImes; 3% (business tax rate) = 30 yuan, after the "reform of the camp", the output tax = 1000 / (1 + 11%) & TImes; 11% = 99.1 yuan, It is regarded as the sales sales tax amount = 800 / (1 + 7%) & TImes; 17% = 116.2 yuan, a cumulative increase of 185.3 yuan should be taxed.

Pulling the whole body

Changing the existing marketing model to adapt to changes in the tax system is a complex project. Both the marketing management model and the IT support system have to be adjusted accordingly. An operator's financial staff said that in order to cope with the changes brought by VAT to enterprises, it is necessary to formulate systems and processes to regulate VAT management work, which requires IT system support.

In addition, there is also an impact on procurement management. A mobile related person said that the current social channels have not yet been included in the “battalion reform and increase” pilot, but even if it is included in the future, it is still difficult to obtain the input deduction for the large number of small-scale agency points. invoice.

The impact on business process management is different from business tax. VAT directly affects the recognition of income, cost and capital expenditure. VAT management needs to be carried out throughout the company's business management process. Under the business tax, the tax elements are relatively fixed, the management work is single, and the planning space is small. Under the value-added tax, the tax elements have the characteristics of variable and controllable. On the one hand, it is necessary to increase the intensity of management and forecasting; on the other hand, it provides more space for tax planning.

Despite the many challenges, “VAT reform” is of positive significance for telecom operators to optimize processes and improve management. It avoids repeated taxation and standardizes internal management features, and will promote the improvement of corporate management, business models and marketing methods.

link

"Camp change and increase" three steps

1. Piloting “reform of the camp” in some areas of some industries. As the first pilot city in Shanghai on January 1, 2012, the “reform of the camp” has been officially launched.

2. Select some industries to conduct pilot projects nationwide. According to the decision of the 7.25 State Council executive meeting, this stage will begin in 2013. From the current situation, the transportation industry and the six modern service industries are the first to be promoted nationwide.

3. Achieving “reform of the camp” across the country, that is, completely canceling the business tax. According to the plan, it is expected to complete the “reform of the camp” during the “Twelfth Five-Year Plan” (2011-2015).

Schneider Electric provide energy and automation digital solutions for efficiency and sustainability. we combine world-leading energy technologies, real-time automation, software and services into integrated solutions for homes, buildings, data centers, infrastructure and industries. We make process and energy safe and reliable, efficient and sustainable, open and connected.

Schneider Inverter

Inverter For Motor,3 Phase Converter For Motor,3 Phase Inverter For Motor,Inverter Dc To Ac

Wuxi Trenty Machinery & Equipment Co., Ltd. , https://www.elec-inverter.com