Analysis: consumption tax "stings" paint enterprises

China Coatings Network
:
from February 1, 2015 officially levied
coatings
consumption tax, for the paint industry and enterprises, there is no doubt that there is a strong effect. As the China Coatings Industry Association said, the overall profit margin of the paint industry has been quite modest, the introduction of a 4% consumption tax, like the bottom of the kettle draw.
but the wood is in a boat, and the policy of imposing a consumption tax on coatings (specifically those with volatile organic matter (VOC) content higher than 420g/L during construction) has come to an end. Even if
paint companies
are no longer willing to change this reality from the will of the state - the only thing that can be done is to actively respond in the context of the consumption tax to minimize the negative impact of the tax on paint production and sales.
from the industry's point of view, the introduction of paint consumption tax is not all bad. For the paint industry, which is in the critical stage of transformation and upgrading under the trend of environmental protection development, the current consumption tax "crisis" is also a major driving force to promote the transformation of the industry, which will force enterprises to increase the proportion of environmental protection products to avoid or mitigate the impact of taxation, and help the industry to eliminate a number of small micro-enterprises that do not meet environmental protection requirements.
is the obvious impact that a simple and predictable coatings consumption tax can have on the coatings industry. The February 2015 cover of "Coating Business" reported on the "mixed" situation in the industry with the introduction of the paint consumption tax in the form of a cut-off report (the deadline was February 4). Due to time constraints, we have not observed more reactions from paint companies, so we have not said much about the impact of taxation on the paint industry in our reports.
Now the paint consumption tax has been levyed full moon, spent the Spring Festival holiday, which means that paint companies must seriously examine the impact of the paint consumption tax, and correspondingly formulate measures - paint consumption tax shock wave so that enterprises have a more personal feeling.
As a result, after the February 2015 issue of the cut-off report, the coating business continued to focus on the paint excerpriation tax, exploring the real "pain" it brings to the industry and enterprises, as well as the entire paint industry's hasty response to the introduction of the consumption tax.
, February 10, 2015, the China Coatings Industry Association held a seminar on coating consumption tax policy in Beijing, attracting many industry participants.
, February 10, 2015, beijing's East Third Ring Road on the Jingrui Building, the large conference hall is crowded with people from all over the country paint enterprises, local paint manufacturers associations, testing institutions; They attended a seminar on the consumption tax on paints.
this time from the Year of the Sheep Spring Festival is less than ten days, according to the convention, most of the country's paint enterprises have been on holiday. But this Spring Festival, for the vast majority of the heads of paint enterprises are doomed to worry - just half a month ago, on January 26, the State Ministry of Finance and the State Administration of Taxation jointly issued the "Notice on the collection of consumption tax on batteries, coatings" (Finance and Taxation (2015) No. 16), pointing out that the introduction of the paint consumption tax from February 1, 2015.
surprise tax notice has blown the paint industry apart. Although the industry knows that the paint consumption tax will come sooner or later, no one would have thought it would come so quickly, and from the notification to the implementation, leaving paint companies less than a week! Unprevoced, no understanding, this is the paint enterprises in the face of the paint consumption tax when the introduction of the basic picture.
China Coatings Industry Association ("China Coatings Association") can be said to know the paint consumption tax formulation and rules of the industry organizations, because it "has been working with national ministries to develop the paint consumption tax policy." At the same time, in March 2014, the China Coatings Association revealed the paint consumption tax is about to be introduced information, but at that time pointed out that before the introduction will be left to paint companies two to three years buffer period.
so-called "buffer period" has not materialized. The Association issued a notice to hold a seminar shortly after the dust settled on the paint consumption tax, and although it was a paid meeting, it received a positive response from paint companies across the country , who needed to know more about the paint consumption tax.
, paint companies also need an outlet to defuse puzzles and vent doubts. We see the entire paint industry in a mess of rushing into a new deal to impose a consumption tax. In the absence of the collection rules, paint companies hope to make a final "struggle" for their own and industry interests by making their voices heard.
why the consumption tax is so painful
paint consumption tax levy notice out, then in the paint industry stirred a thousand waves. Industry widespread concern is that the profits of paint products are already not high, and the imposition of a 4% consumption tax is undoubtedly making matters worse for companies.
" Guangdong paint enterprises on the consumption tax response is relatively fierce. "" Profits are less than 10 points, so companies react so much. Huang Kai, president of the Guangdong Coatings Industry Association, said. Guangdong, as the province with the highest concentration of Chinese paint enterprises, will inevitably be the first to suffer the impact. A business leader said, " (enterprise) many contracts were signed a year ago or six months ago, the original industry is a small profit, net profit in 5% to 10%, now take away 4%, the survival of the enterprise is too difficult." There
additional costs from the GST for the time being. For example, the paint consumption tax sets the conditions for exemption, that is, the construction state OFC content of less than 420g/L (including) paint exempt from consumption tax. This means that coating enterprises need to prove that the production of products in the construction of VOC content of no more than 420g/L can be exempt from consumption tax, can not prove that all need to be levied. This undoubtedly increases the cost of testing for enterprises.
In this regard, Haihong Old Man Coatings (China) Co., Ltd. chief engineer Li Rongjun said that China's paint industry already has a lot of standard limits on harmful substance emissions, in the end is the implementation of national standards, or the implementation of the General Administration of Taxation standards?" This involves the issue of detection. The 4% tax rate is not low, and companies have to increase the cost of testing. Paying this tax would cost millions of dollars a year more. It is not a particular paint factory that
damage, but
the entire coating industry. Fang Qi, deputy general manager of China Resources Coatings Group, also said that some coatings quality to meet national standards, such as film hardness indicators, may exceed the 420g/L VOC limit, enterprises dilemma."China to meet the diverse needs of customers, product ranges are quite a lot, and each series also has multiple varieties, if a variety of invoices, it will cost a lot of testing costs, " said the head of
Dajin Fluoro Coatings (Shanghai) Co., Ltd. Detection is based on the series, or to test, this is very different. The
the test methods and results are also more controversial. Yang Yuande, secretary-general of the China Coating Association, said, "The more commonly used method of detection is that the sample is tested by gas chromatography." This detection method has a large detection error, poor reproducible, lower VOC value, the greater the error; Due to differences in instruments, operators, VOC types and absolute values, there can sometimes be more than 20% relative error, VOC absolute error of up to 20%. In this way, 500g/L and 340g/L sometimes don't make much difference. ”