How to achieve tax concessions

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Although the United States passed a bill in May this year will levy a sales tax on the electricity dealers, but to the online annual sales of less than 1 million dollars of small businesses to grant immunity. And China's current tax incentives for the electricity business is still blank, the existing for small micro-enterprises tax concessions starting point (sales of 20,000 yuan) is too low.

In fact, China does not lack the tax on the electricity dealers ——— the lack of tax on a large number of consumer-to-consumer enterprises is a result of the high cost of the implementation of the problem, the absence of the relevant tax concessions. From this point of view, the current electricity business tax legislation may be diametrically opposed. And how to achieve tax concessions, is to consider the wisdom of the Government, in the emerging industries and traditional industries between the choice.

There seems to be some prospect in the scrutiny of the tax legislation for electricity dealers. Since the two meetings this year, Suning chairman Jindong proposed tax on the electricity dealers, the State administration of Taxation, Ministry of Commerce and other departments are in full swing to investigate the implementation of E-commerce tax measures, there is news that the year is expected to levy a 5% tax. A spokesman for the Ministry of Commerce, Yao Jian, recently said the fiscal and tax authorities are studying the tax legislation for electricity dealers. Although the State administration of Taxation and the Ministry of Commerce later clarified that there was no timetable, the industry's expectation of taxing the electricity dealers was undiminished.

How to view the tax on electricity dealers? There are two opposing views: One view is that offline entities operators need to pay taxes, but the electricity dealers do not need to be paid tax, which is not fair to the offline entity shop, in order to make the two fair competition, must let shop also tax; another view is that Big electric companies are actually paying all kinds of taxes, now a separate tax on the electricity business, is the discrimination against Internet enterprises, but also unfair competition, the government is not the tax, which is related to the tax authorities, the Government should not use this as a reason to levy a separate tax.

It must be pointed out that it is the legal obligation of enterprises and individuals to pay taxes according to law, and any institution or individual engaged in business activities in China shall pay the relevant tax. Then why did the Inland Revenue department not levy a tax on the shop for a long time? This is not because the shop's tax is not legal basis, in the author's opinion, rather because of the size of the shop is too large, the revenue of the shop is also uneven, so that all the shop to pay taxes, The cost of taxation may be too high to outweigh the gains.

Of course, some observers also pointed out that the tax on electricity dealers, similar to corporate income tax and personal income tax, the various physical taxes are not missing, mainly is unable to levy value-added tax and business tax. And the purpose of the Finance and Taxation department investigation, mainly aimed at is like Taobao's C 2C business model, requires the website operators to provide relevant sellers information to the tax department. Before that, companies like Jingdong Mall and Amazon did not have the potential to evade taxes. In this sense, the tax department's so-called online shop tax, the biggest challenge is those who open shop on the Internet small sellers.

So what exactly is the 5% tax levied on this part of the shop? This may be a question that needs to be clarified legally. Shop in China has vitality, cheap price is a very important factor. And the reason price is cheap, in addition to do not need the rental of physical stores and other costs, a lot of small shop's tax cost is also an important factor.

Is that because this part of the shop's low tax cost caused by unfair competition, the need to levy additional electricity levying? As someone said, a line of sales of 1 million yuan in the next year to pay a variety of taxes, and the annual income of billions of shops do not need to pay taxes, this is too absurd. However, there are some problems with this analogy: first, the same line of shops, there are tax and tax evasion, and even if the introduction of new taxes, there will be some shops will evade tax, that is the reason for the part of the shop to levy another new tax?

Secondly, is it suspected of discrimination against the new tax levied by the electricity dealers? As mentioned above, there is no shortage of tax on individual electricity dealers. The current taxes, business taxes, VAT, excise and income taxes have almost included all the links that a company can experience. And in all kinds of transfer links outside the levy of new taxes, often means that the industry has a negative evaluation, for example, many countries levy pollution tax, is to levy the tax to achieve the goal of reducing sewage. So is it an industry that has a negative impact on the society and needs to be regulated by an additional tax policy? Of course not! In this sense, it is true that a separate levy on electricity dealers requires more justification.

However, some people think that since many countries have imposed new taxes on electricity dealers, why can't China? We might as well compare the case of the United States and the European Union. The United States passed the Internet Tax Freedom Act on October 21, 1998, which prohibits federal, state and local governments from imposing any tax on the Internet. Since the enactment of the law, the United States Congress has extended its legal period three times. It is thanks to a series of policy support, including tax incentives, the United States Internet services in the world's leading position. However, because of the lack of specific preferential policies on online sales, the development of electronic commerce lags behind the United States obviously. Although the U.S. Senate passed the Market Equity Act of May 6 this year, it has to pay sales tax when it sells products via internet, mail order, telephone and television, but it also points out that small businesses with online annual sales of less than 1 million dollars enjoy immunity. It needs to be pointed out that the bill has to go through the House of Representatives, and that the bill came about because of the lobbying efforts of traditional retail giants such as Wal-Mart and Best Buy.

Under current American law, the state can only ask a retailer to levy a sales tax on its users, if it has a physical store in the state. Wal-Mart, Best Buy and Target, a large retailer with chain stores across the United States, must pay a sales tax when selling goods over the internet, while online retailers such as ebay and Amazon do not need it unless they have offices or distribution centers in their own country.

The rapid development of China's online shopping has led to the development of surrounding industries, such as the express industry is one of the typical, its driving growth rate of employment is far higher than the overall national level. And in the future that can be seen, E-commerce will continue to grow fast. For this reason, the right thing to do is to give tax breaks to industries that create huge employment opportunities.

So is there a tax concession for electricity dealers in China? Although the Ministry of Finance and the State administration of taxation have tax incentives for small and micro enterprises, but the starting point is too low ——— in accordance with the implementation of the "VAT and business tax temporary regulations" implemented in November 2011, the starting point for small and micro enterprises, the sales of goods and the periodic tax payment, has been raised to 20,000 yuan, That is, such small-scale taxpayer sales of more than 20,000 yuan are subject to VAT or business tax. The low starting point, in fact, is a sword hanging on the head of all electric business enterprises, at any time the danger of going to prison. In fact, Li Xiaohai, a former stewardess, was sentenced to 11 years ' imprisonment and a fine of 500,000 yuan because he was found guilty of smuggling ordinary goods by Beijing Second Intermediate People's Court because of more than 1 million tax evasion.

Compared with the US $1 million trillion, our starting point is really too low. If 1 million dollars is too high, will 1 million yuan be all right?

In contrast to the Fair Market Act of the United States, we may think that China is not in fact short of a tax on online shopping, and that it lacks relevant tax incentives. From this point of view, the current electricity business tax legislation may be diametrically opposed. And how to achieve tax concessions, is to consider the wisdom of the Government, in the emerging industries and traditional industries between the choice.

Fu (scholar, executive Director, Shanghai Institute of Finance and Law)