On December 30, 2021, the Ministry of Finance and the State Administration of Taxation (SAT) issued the Announcement on Improving VAT Policies on Comprehensive Utilization of Resources (No. 40 of 2021), which stipulates that renewable resources recycling enterprises can choose to apply the simplified tax method to calculate and pay VAT according to the 3% levy rate. The new policy has been implemented since March 1, 2022, and for more than a month, the implementation of the landing around the world is not the same, with the waste enterprises reflecting the majority of the problems, according to the in-depth understanding and observation of Huayi, the new policy has not yet completely brought the waste materials industry out of the dilemma.

I. "new policy" but go "the old way", the industry model has not undergone significant change

After the introduction of the new policy, before the implementation, some large steel mills have issued documents, notification for waste natural persons registered individual households and other commercial subjects, accept 3% special ticket (refer to the chart below, rumored to be Jiangsu Shagang issued "Notice"). However, most steel mills are still waiting to see the policy.

March from the main steel mills in the country's scrap supply has a certain decline, the reason or natural person scalper is registering enterprises or seeking third-party business cooperation, and in the apportionment of the 3% tax burden concerns. In order to promote the supply, some steel mills slightly increased the purchase price of scrap.

To mid-April, the research found that most of the steel mills only accept recycling business enterprises issued 13% VAT invoices, a small number of steel mills to accept 1% or 3% invoices, but also requires it to be invoiced to the steel mills under the Ministry of Industry and Information Technology, scrap steel access enterprises or associated companies with financial rebates. At the same time, the recent feedback from industry personnel in many places, some local market supervision departments to suspend the "renewable resources recycling business for the record", resulting in the original engaged in the recycling of waste materials business individuals can not successfully complete the registration of the relevant business entities. Under the influence of a variety of factors, the implementation of Notice 40 in 2021, the renewable resources industry model is still going the "old way", the value of the new policy has not been fully realized.

II. Notice 40 does not solve the problem of cost tickets, the risk of self-built accounts still remain

"Renewable resources recycling enterprises can choose to apply the simple tax method in accordance with the 3% levy rate to calculate the payment of value-added tax" is the core highlights of Announcement No. 40 of 2021, but in solving the problem of the industry's value-added tax burden at the same time, the issue of pre-tax deduction vouchers for enterprise income tax has not been solved. Nowadays, despite the implementation of the new policy, some recycling enterprises still implement the original financial processing methods, i.e., the procurement side of the self-made acquisition vouchers (scalping retailers), self-built acquisition ledgers. But this practice has many risks.

According to industry insiders, after the implementation of the new policy, some local tax bureaus no longer recognize the deduction method of enterprises with homemade acquisition vouchers and self-built ledgers, and require enterprises to provide contracts, payment vouchers and other external vouchers corresponding to the procurement business, and ask for reissuance and replacement of legal invoices, or directly determine that enterprises have not obtained legal pre-tax vouchers, and are not allowed to make pre-tax deductions and require them to make up for the income tax payment, and add late payment fees. Recently, some local tax authorities began to carry out an inventory of the tax situation of renewable resources recycling enterprises, especially concerned about the issue of pre-tax deduction of enterprise income tax vouchers, the enterprises involved in the case of homemade vouchers to account for the deduction of costs, the tax authorities inverted a long period of time, the amount of money involved in the case is large, the enterprise is facing a huge amount of retroactive payment of tax, the risk of late payment fees. Moreover, this is not an individual case, in the renewable resources recycling business input invoice can not be obtained before the reality of the problem is not properly resolved, renewable resources recycling enterprises face false invoicing, back taxes and other tax-related risks will continue to exist.

For the legitimacy of self-made vouchers for pre-tax deduction, we believe that, looking at the relevant provisions of the EIT law on pre-tax deduction, the invoice is only a kind of "legal and valid vouchers" for pre-tax deduction of EIT, but not the only "legal and valid vouchers". The invoice is only a kind of "legal and valid voucher" for pre-tax deduction of EIT, not the only "legal and valid voucher". Invoice is an important kind of pre-tax deduction voucher for EIT, but it is not that no invoice is absolutely not allowed to be deducted, nor is it that deduction will be granted if there is an invoice, but the EIT Law requires that the expenditure is "real", and the vouchers proving that the expenditure has been incurred are "real and effective". The Enterprise Income Tax Law requires that expenditures are "real" and the documents proving the expenditures are "real and effective". According to Article 9 of the Regulations for the Implementation of the Enterprise Income Tax Law, which stipulates that the calculation of taxable income of an enterprise shall be based on the principle of accrual basis, and that income and expenses belonging to the current period shall be regarded as the income and expenses of the current period, regardless of whether or not the payments are received or paid, and Article 8 of the Regulations, which stipulates that reasonable expenses actually incurred by an enterprise in connection with the acquisition of income, including costs, expenses, taxes, losses and other expenses, shall be deducted when the enterprise calculates the amount of its taxable income. income is deducted. From the purchase contract, payment vouchers and other business materials of the recycling enterprise, it can be seen that the expenditure incurred by the recycling enterprise in purchasing the goods is the reasonable expenditure actually incurred by the enterprise, although the expenditure did not obtain the invoice issued by the supplier but was recorded in the accounts with the enterprise's own vouchers, it is still an expense of the current period. The recycling enterprise deducted the annual enterprise taxable income for the actual expenditure without invoice, which is in line with the principle of accrual system, and the tax authorities found that the practice of not making pre-tax deduction in accordance with the provisions of Announcement No. 28 of 2018 lacked the basis of the supreme law.

III. the "double return" enterprises more and more popular, the risk of false opening should not be ignored!

Announcement No. 40 of 2021 clearly puts forward "finance at all levels, the competent departments and their staff, there are violations of the law to give taxpayers engaged in renewable resources recycling business financial rebates, incentives and subsidies, according to the law to investigate the corresponding responsibility." In fact, since the end of 2021, the financial and tax departments have been cleaning up irregular preferential policies nationwide. In this context, "double return" enterprises are more favorable. "Double return" refers to scrap steel access enterprises enjoying the comprehensive utilization of renewable resources product tax rebate policy, enjoying the local financial rebate of renewable resources enterprises. In practice, most of the waste materials recycling enterprises still continue the business model before the implementation of the new policy, that is, through the "double return" enterprises will sell goods to the steel mills and other waste enterprises (such as the aforementioned Jiangsu Shagang "notice" reflected). However, the actual transaction process of some simple procedures is not strictly speaking compliant, which leads to some waste materials recycling business enterprises, and even "double return" enterprises are recognized as false openings, and are subject to criminal liability. According to the experience of Huatax's practical agency, the judicial authorities have questioned the above transaction mode, focusing on:

(I) The goods are directly sent to the steel mills by retailers, and the recycling enterprises and "double return" enterprises are not involved in the actual transportation. In this regard, we believe that the delivery of movable property can be divided into "real delivery" and "conceptual delivery". "Conceptual delivery" is the transfer of the concept of possession, that is, the transferor in the transfer of ownership of movable property, not directly to the transferee, but only indirectly the transfer of possession, China's "Civil Code" Article 227, Article 228 clearly stipulates the right of property in movable property "instructions for delivery Articles 227 and 228 of the Civil Code of China clearly stipulate the conceptual delivery methods such as "instruction delivery" and "change of possession". In the purchase and sale of renewable resources trade, due to the transportation, warehousing links need to spend a lot of cost, and procurement of renewable resources from the retailer of the transaction is fragmented and a large number of real transportation into the warehouse, and then transport out of the warehouse will make the purchase and sale costs, therefore, the resale of goods between enterprises will often agree that the goods do not take place for the time being the reality of the delivery, but rather, through the "indication of delivery The transfer of ownership of goods is accomplished by means of "delivery by direction" or "reclassification of possession". Although there is no spatial transfer of the goods themselves, "delivery" in the legal sense has already taken place. Therefore, although there is no physical flow of goods between the recycling enterprise, the "double return" enterprise and the waste enterprise, the transfer of ownership of the goods has been completed by way of possession reclassification and delivery of instructions, and there is a real flow of goods and goods.

(II) The retailer believes that the transaction took place between him and the steel mill, and has nothing to do with the recycling enterprise or the "double return" enterprise. For this, we believe that: First, the retailer resources for steel mills, recycling enterprises have important commercial value, is an important trade secret. Therefore, there are some grasp of retail resources of the steel mills will not disclose to the retail side of the real information of the dependent party, will not be recycling enterprises, "double return" enterprises to disclose the real information of the retailer, otherwise the retailer is bound to turn directly with the recycling business enterprises docking, looking for more customers to earn higher profits. Therefore, there is a situation where the retailer does not consider himself to be related to the recycling enterprise or the "double return" enterprise. Secondly, in the actual supply process, the retailer may collect and deliver goods through a large centralized collection and delivery, and the dependent party and the dependent party do not have direct contact with each other, and the regular state of the retailer's waste recycling business is multiple times, complicated goods, supplying to multiple customers, and at the same time, being deployed by different customers to depend on different recycling enterprises. As they themselves will not pay attention to tax compliance, invoice compliance, business process compliance and other issues, of course, they will not be able to accurately and comprehensively remember the name of the recycling enterprise in which they are affiliated. Thirdly, according to the "Reference Materials for Training on the Pilot Policy of Comprehensively Pushing Forward the Conversion of Business Tax to Value-added Tax" of the Department of Goods and Labor of the State Administration of Taxation and the relevant judicial cases, the relationship between the two parties is in line with the main features of the dependent operation, i.e., the three features of "borrowing, independent accounting, and temporary", and the explicit indication of the two parties of the "dependence" is not required. "Explicitly expressed, and without the two sides signed a written agreement of dependence, can be recognized that the dependence relationship exists.

(III) The "retail customers" who receive the payment are actually personnel of the recycling enterprise, which constitutes a return flow of funds. In this regard, we are of the view that the personal accounts of employees provided by the recycling enterprise as the company's "capital pool" are used for the purpose of paying/advancing payments to retail customers, and that in the renewable resources recycling business, this type of capital flow has already become a common practice in the industry, and that the purpose is to make timely payments to retail customers while perfecting the relevant purchase and sale transactions in the business, financial and other aspects. Processes. From this point of view, the money transferred back to the personal account of the recycling enterprise is actually the settlement of the payment to the retailer, not returned to the public account of the recycling enterprise, and its only and final use is to settle with the retailer to realize the interests of the retailer's claims, which is an illusion of reflux. If we look at the complete financial chain of the entire procurement of recycled resources, the funds ultimately belong to the retail customers, and there is no so-called "capital flow back" phenomenon.

(IV) Recycling enterprises and "double return" enterprises have not actually weighed, and their documents are made based on steel mill data. For this, we believe that: in the case of not actually responsible for the transportation, recycling enterprises, "double return" enterprises did not physically handle the goods, there is no implementation of the conditions of the weighing, for the conditions usually stationed in the personnel to supervise the steel mills over the pound, or require the steel mills to commit to a truthful record. From the objective facts, the vast majority of steel mills are based on the actual supply of retailers to produce weighbridge, bill of accounts and provide to the recycling enterprises, "double return" enterprises, according to which the recycling enterprises, "double return" enterprises to produce their own weighbridge / warehouse receipts, bill of accounts, its The contents of the documents are derived from the real information supplied by the retailer and are not false.

IV. the platform "on behalf of open" is the key to break the game? Still should be careful screening

The platform economy will be hot to extend its tentacles to all walks of life, in the waste materials industry also appeared a variety of service platforms, can provide online witnesses for the retail trade, and for the retailer on behalf of business registration, invoicing and other matters. This kind of platform propaganda for waste materials suppliers, recycling business enterprises to provide one-stop financial and tax services for the renewable resources industry to solve the problem of "the first ticket", but we suggest that the following issues should be extra attention.

First of all, the natural person sales of goods such as value-added taxable behavior, the tax bureau can only open ordinary invoices, and most of the tax bureau in the opening at the same time approved personal income tax, for example, Shenzhen, Shandong Province and other places will be approved by the tax bureau of 1.5% tax. Then the natural person's tax burden (value-added tax, surtax, personal tax) in the 2.56% -4.86%, and waste materials recycling of low profit margins, usually go to the volume of profit, up to nearly 5 points of the tax burden will make the scalper personal invoices on behalf of the motivation of the big drop. If there is a platform commitment to charge a proportion of less than 2.56% of the minimum tax burden, the legitimacy of the platform, the authenticity of the platform should be particularly concerned.

Secondly, the natural person on behalf of the opening is generally applicable to sporadic small business operations, some scalper sales are also relatively large, at this time, the platform will provide services to register as an individual industrial and commercial enterprise, due to the sale of goods does not belong to the State Administration of Taxation Announcement No. 8 of 2019 the scope of the eight industries of small taxpayers to open their own invoices, and therefore the same shall be opened by the tax bureau on behalf of the tax bureau and the collection of value-added tax, surtax, individual tax, and the cost of which is higher than that of the natural person on behalf of the opening of the High (including the cost of self-employed persons), but also to combat the enthusiasm of natural persons to set up commercial entities. What we need to pay attention to here is that some scalpers have sales exceeding the annual 5 million standard for small-scale taxpayers, and at this time they are facing the problem of needing to split their sales, and they should pay attention to the risks involved; at the same time, most of the self-employed households are registered in some "depressions", which are officially the focus of the regulators, and the tax authorities are also concerned about the "depression", and the tax authorities will be very concerned about the "depressions". At the same time, most of the individual households are registered in some "depressions", which are the focus of the regulators' attention, and the tax risk may break out at any time.

Finally, for the recycling business enterprises, the acquisition of formal general-purpose tickets means that the cost can be legally deducted, and its revenue is about 25% of the cost of corporate income tax, then pay a certain price to obtain a compliant general-purpose tickets are also recycling business enterprises are happy to see. However, some platforms have also derived from the use of other people's identity information to falsely register individual households invoicing, charging a fee for profit-making illegal and criminal behavior, then for the recycling business enterprises, it is necessary to ensure the authenticity of the retailer's sales of goods, and let it voluntarily through the platform to open, but also be careful to identify all kinds of platforms qualifications and business conditions, to avoid the occurrence of the invoicing of platforms negligent management of the individual household, resulting in the emergence of the individual households to violate the tax regulation and other phenomena. The platform should also carefully check the qualifications and business conditions of various platforms to avoid any negligence in the management of individual households after invoicing, which may cause individual households to violate the phenomenon of tax supervision.