On March 28, the State Council Executive Meeting decided to deepen the reform of the value-added tax (VAT reform). The meeting decided that starting from May 1, 2018, the value-added tax rate of the manufacturing industry and other industries will be reduced from 17% to 16%. It will include transportation, construction, and infrastructure. The value-added tax rate for goods such as telecommunications services and agricultural products has been reduced from 11% to 10%, and it is estimated that tax deductions of RMB 240 billion will be achieved throughout the year.

At the same time, the meeting decided to harmonize the standard for small-scale VAT payers. To increase the annual sales standard for small-scale taxpayers in industrial and commercial enterprises from 500,000 yuan and 800,000 yuan to 5 million yuan, and allow companies registered as ordinary taxpayers to be registered as small-scale taxpayers within a certain period of time. , allowing more companies to enjoy tax reductions at lower rates.
The amount of input tax that has not been deducted within a certain period of time shall be refunded once for enterprises and grid companies that meet the requirements of advanced manufacturing, R&D and other modern service industries such as equipment manufacturing. The implementation of the above three measures will reduce the tax burden of market entities by more than 400 billion yuan in the whole year, and domestic and foreign-funded enterprises will all benefit equally.

First, the overall impact of tax reduction on the manufacturing industry?
Li Xunlei, an economist, said that the manufacturing tax cuts are in line with expectations. The government work report in 2018 has clearly stated that “the reform and improvement of value-added tax will adjust the tax rate in accordance with the third gear and two gears, with a focus on reducing the tax rates in industries such as manufacturing and transportation”. This round of tax cuts has long been in vogue, and is expected to open a subsequent drop. Tax curtain.
1. The manufacturing industry has cut taxes by 100 billion yuan.
According to quantitative calculations, excluding the impact of the increase in taxable income due to the decrease in value-added tax, the manufacturing industry is expected to reduce taxes by 78.3 billion yuan in the first three quarters, which is equivalent to approximately 104.4 billion yuan in the whole year, of which the tax reduction in the upper reaches is approximately 30.91 billion yuan. A total of RMB 42.03 billion was tax-deducted by approximately RMB 31.47 billion in the downstream. The actual tax cuts in the automobile manufacturing, computer communications, and other electronic equipment manufacturing industries were the highest, reaching 16.93 billion yuan and 11.17 billion yuan respectively.
2, the upper reaches of the most obvious profit elasticity.
According to calculations, this tax reduction is expected to boost the total profit of the manufacturing industry by 11.2%. Affected by the profit base, the upper, middle and lower reaches respectively increased by approximately 15.7%, 11.2%, and 8.8%. Non-ferrous metallurgy, chemical fiber, and railway ship industries saw the largest increase in profits, reaching 28.9%, 18.5%, and 17.5%.
3. How will the subsequent tax reduction impact?
If the value-added tax rate subsequently drops to 13%, it is expected that the total net profit of manufacturing companies will increase by 44.8%. Among them, the upper, middle, and lower reaches will increase by 62.8%, 44.9%, and 35.1%, respectively. Non-ferrous metallurgy, chemical fiber, and railway shipbuilding industries will profit. The rebound rate reached 115.6%, 74.0% and 70.1%.
From the point of view of the introduction of the VAT reform, the tax reduction at this time is just right, because it is precisely because the United States provoked trade disputes. In the case that everyone is not optimistic about the export situation this year, tax cuts are used to stimulate domestic demand and change expectations. Realize a steady increase in investment growth.

Second, the impact of tax reduction on the cotton market
The value-added tax for cotton imports will fall by 1 percentage point from 11% to 10%, which will help reduce the cost of cotton imports. Taking 91 cents/lb as an example, the import cost before the VAT rate adjustment is 14,435 yuan/ton (calculated in accordance with the RMB exchange rate of 6.3294 and the port fee of 200 yuan/ton), after adjustment, it is 14,307 yuan/ton, in theory, the import cost is reduced by 128. Yuan / ton.
In addition, companies are more concerned with the problem of reserve cotton padding, which means that the new tax rate will be applied starting from the second week of May. Taking the reserve price of reserve cotton for this week at 15013 yuan/ton as an example, the tax rate is reduced to 14,949 yuan/ton on a reduced basis, which is 64 yuan/ton lower than the unadjusted value.
The adjustment of this tax policy will have some impact on cotton reserve pricing, import trade, cash flow and other aspects.

Third, the impact of tax reduction on the cotton textile industry
First of all, the adjustment of the manufacturing VAT tax rate will directly affect the cost of cotton yarn imports.
Secondly, for companies that purchase cotton for spinning production, the difference from the previous round of VAT adjustment is that this tax rate adjustment involves both raw and finished goods, and it also affects the input tax and output tax of textile enterprises. For agricultural products deep-processing enterprises (spinning mills), if the value-added tax rate of agricultural products they purchase is reduced from 11% to 10%, theoretically, the input offset will be reduced; at the same time, the reduction of the current manufacturing tax rate will also lead to cotton yarn. The output tax generated by sales has also been reduced by 1%. According to the feature that the value-added tax (VAT) is a kind of turnover tax that only adds value to the value-added portion of the product, the current rate adjustment will reduce the "VAT" tax burden at one point.
Due to the problem of “high and low deductions” in the production process from agricultural products to industrial products, this issue was resolved in 2012 after the “Approval Measures for the Deduction of Input Taxes for Agricultural Products VAT Input Taxes” was released, and it is in the province of cotton textiles. Such as Henan, Shandong promotion, basically solved the problem of "high-legged and low-buckle" from cotton to yarn. There are slight differences in the financial operations among the companies in each region. Therefore, the reduction in the manufacturing tax rate this time has generally had a positive impact on the cotton textile industry, and the overall tax burden of the industry has been reduced, which will help improve the overall efficiency of the industry.
According to the research results of economist Li Xunlei, the tax reduction is expected to push the total profit of the manufacturing industry to rise by 11.2%. Affected by the profit base, the upper, middle and lower reaches respectively increased by approximately 15.7%, 11.2%, and 8.8%. Among them, the profits of the chemical fiber industry outside the upstream rebounded the most, reaching 18.5%; the profit growth of the textile industry in the middle reaches was about 11.2%; the apparel and home textile industry in the downstream benefited the least, and the profit rebounded around 8.8%. .