What is a tax credit?

"Exemption, credit and refund" tax is a way of export tax rebate. The Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China, on Further Promoting the Measures of Exemption, Credit and Tax Refund for Exported Goods (Caishui [2002] No.7) stipulates that unless otherwise stipulated, China will implement the measures of exemption, credit and tax refund for self-produced goods exported by production enterprises or foreign trade enterprises.

"Duty-free" refers to the self-produced goods exported by a production enterprise, which are exempted from the value-added tax in the production and sales of the enterprise;

"Deduction" tax refers to the input tax that should be refunded from the raw materials, spare parts, fuel and power consumed by the self-produced goods exported by the production enterprise to offset the taxable amount of the domestic goods;

"Refund" tax refers to the tax refund of the part that should be deducted in the current month when the input tax amount is greater than the taxable amount of the self-produced goods exported by the production enterprise.

The Notice of the Ministry of Finance of People's Republic of China (PRC), State Taxation Administration of The People's Republic of China, on Further Promoting the Measures of Exemption, Credit and Tax Refund for Exported Goods (Caishui [2002] No.7) stipulates that, unless otherwise stipulated, goods exported by production enterprises themselves or entrusted by foreign trade enterprises are exempt from VAT. Measures for the administration of non-self-produced goods exported by production enterprises shall be formulated separately.

The meaning and calculation of the policy of "exemption, payment and refund" are introduced in detail in various documents, but this management method itself is abstract, and it is changed from the previous management method, and the changed content also adds some difficulty to understanding, so it is difficult to operate in practice. We will introduce this problem here to help you understand.

(Note: In order to facilitate learning and understanding, this paper introduces some common but nonstandard terms, including some popular expressions corresponding to normative concepts, and explains their meanings. Some of them are used alone, cross-referenced and assisted, just for understanding. In formal use, we should still use standardized terms to avoid misunderstanding.

First, several concepts related to the management method of "exemption, credit and refund"

Generally speaking, "exemption, credit and refund" have different meanings. (1) "Exemption" means that the goods produced by production enterprises are exempted from value-added tax in the process of production and sales; (2) "Offset" refers to offsetting the taxable amount of the export products of this enterprise with the taxable amount of domestic products in this period. (3) "Tax refund" means that when the actual tax refund determined according to the above-mentioned process reaches a certain standard, that is, when the input tax amount that should be deducted for the self-produced goods exported by the production enterprise in the current month is greater than the taxable amount, the tax refund will be given to the non-deducted part.

In this regard, possible questions include: Why should such a procedure be adopted for VAT export tax rebate? Also, why not directly stipulate that the tax rebate rate is the VAT rate applicable to export products? What is the practical significance of reaching the summit? Why do you need to compare the tax exemption amount with the current tax exemption amount to determine the actual tax refund amount?

We should focus on the following aspects:

(1), current tax exemption and refund, that is, according to the tax exemption and refund policy, the input tax amount that should be deducted in the current period can also be understood as the nominal tax refund amount calculated according to the applicable nominal tax refund rate and the current export volume of the enterprise. Why do you say it is a nominal tax refund? Because there is still an actual tax refund. (See below)

② Zero export tax rate: In fact, China implements zero export value-added tax rate for qualified export goods. For value-added tax, the essence of zero sales tax rate means that the taxable amount in this link is negative, that is, the output tax-input tax is less than 0, which means that the input tax contained in the corresponding goods will be refunded in this link.

(3) Tax refund rate. The taxation principle of value-added tax determines that only the value-added amount in each circulation link is taxed at the applicable tax rate, but the theoretical value-added amount is difficult to identify in practice, so the output tax is adopted as the practical method to collect the taxable amount after deducting the input tax. However, because the production and circulation of an enterprise is a continuous but not one-to-one process, the raw materials, spare parts, fuel and power purchased in this period may not be consumed in this period, but these things actually consumed in this period are included. Therefore, for the need of tax collection and management, the tax law stipulates that the method of setting hypothetical export tax rebate is adopted to solve this problem, that is, artificially setting the tax rebate rate to calculate tax exemption (nominal tax rebate), regardless of how much input tax is included in the actually consumed materials and materials;

(4) Adjustment of tax refund rate. Based on the above reasons, the adjustment of tax rebate rate actually reflects the financial and industrial policies of the country, rather than the change of input tax actually included in export products;

⑤. Refund system. In fact, most enterprises do both export sales and domestic sales. Therefore, it is difficult to accurately distinguish the input tax amount that should be refunded in raw materials, spare parts, fuel and power actually consumed by export products in the current period. In tax practice, the tax rebate rate is artificially determined. First, the calculated current tax exemption (that is, the current nominal tax rebate or deductible input tax) is used to offset the value-added tax payable by domestic products. It's easy to operate. Therefore, "Caishui [2002] No.7" is interpreted as: "Exemption" refers to the input tax that should be refunded for raw materials, spare parts, fuel and power consumed by production enterprises to offset the taxable amount of domestic goods ". In fact, it can be understood that in practice, the two steps of "exemption and deduction" are carried out at the same time, and then it is decided whether to refund and how much tax to refund after exemption and deduction.

6. The remaining tax at the end of the period. What needs to be explained here is that there are two concepts of the final tax retention: the actual tax retention at the end of the period and the nominal tax retention at the end of the period. "Actual ending tax allowance" is the input tax that can be deducted in the future. In terms of amount, actual end-of-term tax allowance = nominal end-of-term tax allowance-actual tax refund amount in the current period; "Nominal end-of-term tax allowance" is an intermediate concept for calculating tax exemption and actual end-of-term tax allowance, which is equal to the absolute value of current tax payable when the current tax payable is less than zero. The following conditions may exist:

1. If the calculated tax payable in this period is greater than zero, it means that the input tax refundable for export in this period is not enough to cover the tax payable for domestic goods (that is, it is not enough to cover the top), and there is still tax payable in this period. In this case, there should be no final tax allowance.

When the calculated current tax payable is less than zero, the following two situations may occur:

Two. If the Absolute Value of Taxable Amount in Current Period is less than or equal to the Nominal Tax Refund Amount in Current Period, the actual tax refund amount is limited to the Absolute Value of Taxable Amount in Current Period. And "actual remaining amount at the end of this period = nominal remaining amount-actual tax refund amount in this period = absolute value of tax payable in this period = absolute value of tax payable in this period =0, that is to say, there is actually no remaining tax!

Three. If the "absolute value of current taxable amount" is greater than or equal to the "current nominal tax refund amount", the actual tax refund amount is the current nominal tax refund amount. However, "actual end-of-term allowance = nominal end-of-term allowance-actual end-of-term tax refund = absolute value of current tax payable-actual end-of-term tax refund > 0, so it can be said that the" actual end-of-term allowance "at this time is the real end-of-term tax allowance! At this time, the final tax allowance is the input tax that is not deducted (note that it is not deducted, not deducted), but because the production and business activities of the enterprise are continuously invested, it is impossible to determine whether this part of the tax allowance belongs to export or domestic sales, because it may also correspond to export or domestic sales in the future.

⑦ The actual tax refund amount is relative to the nominal tax refund amount, that is, the current tax exemption amount. Why do you say that? Because assuming that the management method of tax exemption and refund is not implemented, this part of the so-called tax exemption and refund amount is the tax refund that enterprises should receive. However, under the mortgage system, this refundable input tax should be used to offset the taxable amount of domestic products first, and the remaining tax will be refunded after mortgage.

As for the actual calculation, we need to make another comparison, that is, to see whether the tax refund amount is lower than the tax refund amount at the nominal end of the current period, and then the actual tax refund amount shall prevail, whichever is lower. This process is actually a process of confirming whether there is a mortgage amount and how much, so as to further determine the tax refund amount.

The principle of this comparison process is introduced when analyzing the calculation method and formula.

(eight) tax exemption and tax refund shall not be reduced or exempted. If the tax exemption and tax refund management measures are implemented and the tax refund rate is stipulated by the state, then the nominal tax rate and tax refund rate of export goods are different, such as nominal tax rate 17% and tax refund rate 13%, with a difference of 4%. This part is actually neither tax-free nor tax-deductible. On the contrary, it is an increase in taxes payable.

9. Brief analysis of the principle: the principle of the management mode of "exemption, credit and refund" is mainly to offset the tax payable of domestic products with the tax payable of exports. The process of offset is called "exemption" and the amount of offset is called "exemption", which links the tax payable of domestic sales with the tax refund exemption of exports and simplifies the collection process. In this process, we need to focus on several points: tax payable, tax exemption, tax refund, actual tax refund, final tax credit and so on.

Let's analyze the process of "free access" from another angle:

If the enterprise has both export and domestic sales in the current period, the tax payable on domestic sales goods shall be deducted by export tax rebate first. However, there may be two situations in the process of cancellation. First, there is no need to deduct. When the calculated domestic tax payable is less than zero, there is actually no need to deduct it. Therefore, all export tax rebates should be refunded in the current period, and the enterprise's tax credit at the end of the current period is positive; Second, the calculated domestic tax payable is greater than or equal to zero. At this time, there are two situations in which the export tax payable is taken as the down payment. One is that there is no need to pay taxes in the current period after payment, that is, the tax payable is more than enough, but there is still a tax refund that has not been paid. At this time, the unpaid tax refund is returned to the enterprise, which is equal to the calculated current tax payable. In this case, the tax rebate is equal to the nominal tax rebate. In another case, after mortgage, a certain value-added tax has to be paid, that is, the mortgage is not enough, that is to say, the current tax refund has been fully deducted from the taxable amount, and the tax has not been fully deducted.

As far as the first and second cases are concerned, it is to determine "which is lower, the nominal end-of-period tax allowance or the nominal tax refund". Here, the current nominal ending tax allowance is equal to the absolute value of the current taxable amount, and the "current actual tax refund amount" is the lower of the absolute value of the current nominal tax refund amount and the current taxable amount or the current nominal ending tax allowance.

Second, the understanding of calculation methods and formulas

According to "Caishui [2002] No.7", there are a series of calculation formulas for tax refund, but these formulas in the document are optimized according to the theory or transformed into practical operability, which is convenient to use, but difficult to understand. We can do some simple analysis of the meanings and connections of these formulas (red font is the original text, black is the analysis, and blue is the content that needs to be emphasized or concerned):

1. Calculation of tax payable in this period, tax payable in this period = output tax of domestic goods in this period-(input tax in this period-tax exemption and refund in this period shall not be reduced)

This formula is easy to understand, and the subtraction between the two items in brackets is the real meaning, that is, the input tax allowed to be deducted from the output tax of domestic goods in the current period and the input tax that should be refunded for export. Theoretically, the allowable input tax deduction can only be the corresponding part of the current input tax that belongs to the materials consumed in the production of domestic products. However, due to the differences caused by time and other reasons, it is impossible to distinguish clearly, and it can only be calculated by artificially simplifying the determination method, that is, subtracting the tax allowance from the total input tax amount of the current period. In this part, there are both the input tax deductible for domestic goods and the input tax refundable for export goods. These two parts are used as input tax to offset the output tax of domestic goods in the current period, which actually reflects the process of tax exemption, that is, the process of tax exemption to offset the tax payable in domestic sales.

The concept behind the brackets is awkward. The so-called current tax exemption refers to the "unavoidable" and "non-deductible" parts of the input tax, which cannot be exempted when calculated according to the tax exemption system. This part of the calculation formula is the following four. Please refer to this part of the analysis for details.

2. The calculation of tax exemption, tax exemption = FOB price of export goods × RMB foreign exchange quotation × tax refund rate of export goods-tax exemption; These include:

1. The FOB of export goods shall be based on the FOB calculated on the export invoice. If the export invoice can't truly reflect the actual FOB price, the enterprise must report to the competent tax authorities according to the actual FOB price, and the competent tax authorities have the right to verify according to the relevant provisions such as the Law of People's Republic of China (PRC) on Tax Collection and Administration, the Provisional Regulations of People's Republic of China (PRC) on Value-added Tax, etc.

2. Tax-free amount = price of duty-free purchased raw materials × tax refund rate of exported goods.

The duty-free procurement of raw materials includes the purchase of duty-free raw materials from China and duty-free imported materials for feed processing, in which the price of duty-free imported materials for feed processing is taxable value.

Taxable value = CIF+actual tariff and consumption tax for imported materials and parts for duty-free processing.

As mentioned above, the "tax exemption amount" calculated by this formula is the nominal tax refund amount or the deductible input tax amount under the tax exemption system. The essence of the last deduction in the formula of "tax exemption and reduction" is that the raw materials purchased duty-free do not contain input tax, so this part of the tax that did not exist originally should not be refunded when calculating the tax exemption and reduction, so it should be eliminated through calculation.

Three. Calculation of current tax refund and allowance

1. If the remaining tax amount at the end of the current period is less than or equal to the tax exemption amount of the current period, then

Current tax refund amount = current end-of-period tax allowance

Current tax allowance = current tax allowance-current tax refund amount

2. If the current period-end tax exemption is greater than the current period-end tax exemption and tax refund, then

Current tax refund amount = current tax exemption amount

Current tax allowance = 0

The period-end tax allowance is determined according to the "period-end tax allowance" in the current VAT tax return.

This is actually a set of formulas to judge the actual tax refund amount in the current period. The idea adopted is: current tax refund = min[ current end-of-period tax allowance; Current tax exemption and tax refund amount]. (i.e. whichever is smaller).

It needs to be clarified that the "final tax allowance" here is actually a nominal tax allowance. Why do you say that? Because the final actual end-of-term allowance = nominal allowance-actual tax refund in the current period, and the nominal allowance here =-current tax payable, of course, this must meet the premise that the current tax payable is less than zero. Only by making this clear can we understand the role of the tax refund amount compared with the remaining amount at the end of the period. In fact, it is to judge how much the current nominal tax rebate should actually be refunded and how much it has actually been topped. Because by extension, the comparison here is actually to compare the "nominal tax refund amount for the current period" with the "absolute value of the current taxable amount", and the nominal tax allowance is equal to the absolute value of the current taxable amount, or negative (because the current taxable amount is less than zero).

Let's talk about why we should make such a comparison. In fact, this is the essence of the management method of exemption from payment and refund, because the so-called exemption is to decide whether to pay or not and how much to pay by comparison. According to the system design, the nominal tax refund, namely tax exemption and tax refund, is related to the domestic tax payable, which can also be calculated by the following formula:

Taxable amount of domestic products = current output tax amount of domestic products-(current input tax amount-current tax exemption amount-current tax exemption amount cannot be reduced)

Why should the tax rebate for export products be reduced in brackets? Because the input tax included in the export goods identified according to this management method should have been refunded separately, it should be excluded from the current input tax. As for "the current tax exemption and tax refund cannot be exempted and deducted", its name itself has clearly told us that this is a tax that cannot be exempted for export and deducted for domestic sales. Although it is only called tax, it is obviously not an output item, but an input tax, so it essentially refers to the input tax that cannot be deducted. The input tax has to be transferred out in accounting, so it will be excluded from the input tax here.

In this way, if you pay a little attention, you will find that there is only one difference between the calculation formula of domestic tax payable and the calculation formula of current tax payable, that is, the tax exemption and tax refund in the current period. This tax exemption is not deducted from the current tax payable formula, but reflects the process of topping up.

Deduce the tax payable of domestic goods = current tax payable+current tax exemption;

This is an important formula, but let's put it down for the time being and analyze it from the principle of tax exemption and tax refund. The nominal tax refund amount of an enterprise is the current tax exemption amount, and finally there may be three situations, namely three processing results:

(1) The taxable amount of domestic goods is greater than zero, and it is greater than the taxable amount of exports, so it is still insufficient to deduct the taxable amount of domestic products. In this case, there is no need for tax refund. This is the case that the current tax payable is greater than zero, which actually means that the export refundable input tax is not enough to cover the domestic tax payable. At this point, the actual mortgage amount = tax exemption and tax refund amount. Tax refund amount = 0;

(2) The taxable amount of domestic goods is greater than or equal to zero, but less than the taxable amount of export, which is more than enough. In this case, the export tax rebate is used to deduct the taxable amount of domestic goods, and there is still a balance, so:

Actual tax refund = current tax allowance-current domestic goods tax payable = current tax allowance-(current tax payable+current tax allowance) amount =-current tax payable = current tax allowance;

The applicable conditions of this situation are: the tax payable in this period is less than zero and the tax payable in this period of domestic goods is ≥0, that is, the tax payable in this period+the tax exemption in this period is ≥0, that is, the tax exemption in this period is ≥-the tax payable in this period = the tax retained in this period;

On the other hand, when the tax exemption amount in the current period is greater than or equal to the tax retention amount in the current period, the actual tax refund amount in the current period = the tax retention amount in the current period;

(3) The taxable amount of domestic goods is less than zero, and there is no need to pay taxes. In this case:

Actual tax refund = tax refund allowance;

The applicable conditions of this situation are: the tax payable in this period is less than zero and the tax payable in domestic goods is less than zero, that is, the tax payable in this period+the tax exemption in this period is less than zero, that is, the tax exemption in this period is less than-the tax payable in this period = the tax retained in this period;

On the other hand, when the current tax exemption amount is less than the current tax allowance, the current actual tax refund amount = the current tax exemption amount;

4. Tax reduction or exemption shall not be calculated. Tax reduction or exemption does not mean the FOB price of export goods ×× (export goods tax rate-export goods tax rebate rate)-tax reduction or exemption shall not be allowed.

Tax exemption and tax refund shall not be reduced or exempted. Tax deduction = price of raw materials purchased duty-free × (export tax rate-export tax rebate rate)

It is difficult to understand these two formulas separately, but when they are combined, they become: No tax exemption and tax deduction allowed = FOB export goods × foreign exchange RMB quotation × (export goods tax rate-export goods tax rebate rate)-raw material price for duty-free purchase × (export goods tax rate-export goods tax rebate rate) = (FOB export goods × foreign exchange RMB quotation-raw material price for duty-free purchase) × (export goods tax rate-

In this way, the amount of tax that cannot be exempted and deducted is more clear, that is, the difference between taxation and tax refund for the remaining part after deducting the price of raw materials purchased duty-free from the identified export sales. There are three reasons for this calculation. First, duty-free purchased materials themselves do not contain input tax, so tax exemption and deduction should not be calculated and should be eliminated; Secondly, because the input tax corresponding to the materials actually consumed by export goods cannot be accurately determined, the input tax is calculated according to a certain proportion of sales when calculating tax exemption and tax refund, that is, the tax refund rate in a fixed formula; Third, for the same reason as Article 2, since it is impossible to directly calculate the tax refund, the alternative method is to calculate the tax amount that cannot be reduced or exempted first, and use it as the intermediate data for indirectly calculating the tax reduction or exemption. Delete it from the input tax in the formula 1. The excluded part is the amount that can be reduced or deducted from the total input tax amount in the current period, which is actually the input tax amount that the tax law allows to be deducted from the output tax amount in the current domestic sales.

Note that "No tax exemption and deduction allowed" is different from the previous "tax exemption and deduction". "Tax exemption and credit" is actually a non-credit amount, which does not exist in actual accounting treatment, but as a calculation idea of tax exemption and credit, this part must be eliminated. Through the analysis of the calculation formula, it can be understood that the tax that cannot be exempted and deducted is also calculated for the raw materials purchased duty-free, so the tax that cannot be exempted and deducted is calculated separately as a correction.

In addition, we can see the relationship between them from the formula: tax exemption = the price of raw materials purchased duty-free × the tax refund rate of export goods; Tax exemption and tax refund shall not be reduced or exempted. Tax credit = price of duty-free raw materials × (export goods tax rate-export goods tax rate) = price of duty-free raw materials × export goods tax rate-tax credit for duty-free raw materials × export goods tax rate = price of duty-free raw materials × export goods tax rate-tax credit. Namely: the price of raw materials purchased duty-free × the tax rate of export goods = tax exemption and tax deduction+tax exemption and tax deduction.