Scrap steel tax rebate of 30% is further standardized! Executed from March 1
In order to promote the sustainable and healthy development of the comprehensive utilization of resources industry, the Ministry of Finance and the State Administration of Taxation recently issued the “Announcement on Improving the Value-Added Tax Policy for Comprehensive Utilization of Resources” (Announcement No. 40  of the Ministry of Finance and the State Administration of Taxation) (hereinafter referred to as Announcement No. 40) ), clarified that the new VAT policy for comprehensive utilization of resources will be implemented from March 1, 2022. Among them, eligible enterprises, scrap iron and steel can be refunded at 30%.
What are the major changes in Announcement No. 40 compared with the original value-added tax policy for comprehensive utilization of resources? What impact will it have on the development of the scrap steel industry and even the entire steel industry? analyze as below:
1. The choice of the tax calculation method for taxpayers of renewable resource recycling has been added
General VAT taxpayers engaged in the recycling of renewable resources can choose to apply the simple tax calculation method to calculate and pay the value-added tax at the rate of 3%, or apply the general tax calculation method to calculate and pay the value-added tax.
Q: How are the two tax calculation methods different and what are the implications?
Answer: The simple tax calculation is based on 3% of the tax-free sales, and the input invoice cannot be deducted; while the general tax calculation method is based on the output tax – 13% of the value-added part of the input tax. . Renewable resource recycling taxpayers can choose simple tax calculation to reduce their tax burden. Of course, certain qualifications are required to choose the simple tax calculation method.
Enterprises engaged in scrap steel recycling, processing, and trade can choose simple tax calculation and issue 3% value-added tax invoices. For enterprises that meet the access of the Ministry of Industry and Information Technology for scrap steel processing, because they can enjoy the policy of immediate refund and collection, they can accept 3% VAT invoices to a certain extent, and issue 13% output invoices, and the value-added tax can enjoy immediate collection. back. However, for steel mills, since the sales of finished products is issued with a 13% sales invoice, if the input invoice is 3%, the value-added tax will increase significantly, and the cost of the steel mill will inevitably increase, or it will be transferred by reducing the purchase price of scrap steel.
2. Emphasize the physical properties of renewable resources
The term “renewable resources” as mentioned in this announcement refers to various wastes that are generated in the process of social production and consumption and have lost all or part of their original use value. After recycling and processing, they can regain their use value. Among them, processing is limited to simple processing such as cleaning, selection, crushing, cutting, dismantling, packaging, etc. to change the physical properties of renewable resources such as density, humidity, length, thickness, softness and hardness.
Q: What is the difference with the previous file?
Answer: The emphasis is on the treatment of physical properties, including the simplest processing operations, such as selection and cleaning.
3. It is stipulated that those who violate the laws of financial returns and rewards will be held accountable
Finances, competent departments and their staff at all levels who violate laws and regulations and give taxpayers engaged in renewable resource recycling business financial returns, rewards and subsidies, shall be investigated for corresponding responsibilities in accordance with the law.
Q: What does this mean?
A: The return of value-added tax by local governments may become a thing of the past, and local financial subsidies will likely be blocked. After the new policy, for the scrap steel industry, some and only the access bases of the Ministry of Industry and Information Technology will have a tax rebate policy. Relevant policies and regulations will make financial rebates and incentives more targeted and standardized.
4. The tax refund conditions for comprehensive utilization of resources have increased or decreased
The newly added tax refund conditions mainly include: first, the acquisition of renewable resources should obtain legal certificates, and if legal certificates are not obtained as required, the sales income of this part shall not be taxed; To urge renewable resource recovery enterprises to comprehensively collect and record information on the acquisition of renewable resources, and provide a basis for tax authorities to verify the authenticity of enterprise business through follow-up management.
The conditions for relaxation mainly include: first, the “Hazardous Waste Business License” issued by the environmental protection department at or above the provincial level shall be relaxed to be issued by the provincial or municipal ecological environment department; RMB 10,000 has been raised to RMB 100,000, and the starting time of no tax refund has also been adjusted from “within 36 months from the month following the decision on punishment” to “no enjoyment of the provisions of this announcement within 6 months from the month when the decision on punishment is made” the VAT refund policy”. However, if the taxpayer has two or more of the circumstances specified in Item 7 of Article 3 (2) of Announcement No. 40 within 12 consecutive months, the taxpayer shall not enjoy the announcement within 36 months from the month when the second penalty decision is made. The stipulated value-added tax refund policy.
Q: What information does this reveal?
A: There are specific requirements for invoices related to recycling and renewable resources. Except for natural persons who cannot reach the threshold, they must bring tickets. Those who are exempt from tax must also issue ordinary invoices. Self-made vouchers will become a thing of the past. In addition, it is required to establish a renewable resource purchase ledger and keep it for future reference. When a taxpayer applies for the instant refund policy, it should meet 7 conditions at the same time (see the full text of the document below for details). The newly added tax rebate conditions increase the qualification review for those who meet the tax rebate conditions to ensure that policy dividends really benefit eligible enterprises; while the relaxed conditions make policy implementation more convenient and faster, and are more conducive to promoting the healthy development of scrap steel enterprises.
The names of comprehensively utilized resources, the names of comprehensively utilized products and labor services, technical standards and relevant conditions, and the tax rebate ratio, etc., shall be implemented in accordance with the relevant provisions of the “Catalogue of Preferential Value-Added Taxes for Comprehensive Utilization of Resources Products and Labor Services (2022 Edition)” attached to this announcement. Among them, scrap iron and steel is applicable to 3.5 in the table, and the 30% tax rebate policy is further tightened, and two conditions must be met:
a. The taxpayer complies with the relevant regulations of the Ministry of Industry and Information Technology’s “Access Conditions for Scrap Iron and Steel Processing Industry”;
b. The sales target must be iron and steel enterprises (excluding foundry enterprises) that comply with the “Standard Conditions for the Iron and Steel Industry” issued by the Ministry of Industry and Information Technology.
These changes are expected to present scrap processors with two choices:
In the first case, the supplier is required to deliver all the goods with invoices, choose the simple tax calculation method, and issue a 3% VAT invoice to the steel mill. In this case, the tax cannot be refunded, and the steel mill faces an additional 10% VAT cost. , although the purchase price adjustment can be used, there is no preferential treatment, therefore, the steel mill will probably not be willing to accept the 3% invoice;
In the second case, the scrap processing access enterprise can require the supplier to set up a recycling company to supply the goods with a ticket, or set up a recycling company to receive the goods from the supplier, and require the supplier to bring the ticket as an individual industrial and commercial household or a small-scale taxpayer. Supply recycling companies, recycling companies choose the simple tax calculation method, issue 3% of the invoices to the approved enterprises, and the approved companies issue another 13% of the invoices to the steel mills on the standard list, and the tax rebate is 30%, so for the steel mills , can enjoy most of the benefits of tax rebates through price adjustment, and may become the choice of most steel mills.
Scrap steel is an important ferrous raw material in the iron and steel industry. It is the only ferrous raw material that can replace iron ore in large quantities, and it is also a green renewable resource that can be recycled indefinitely. It is understood that using scrap steel to produce 1 ton of steel can save 1.65 tons of iron ore, reduce energy consumption by 350 kilograms of standard coal, use 1.7 tons of new water, reduce 1.6 tons of CO emissions and 3 tons of solid waste emissions. Using scrap steel as a raw material for steelmaking is not only the need for the steel industry to adjust the structure and reduce carbon emissions, but also the need to enhance resource security by reducing the demand for raw ore, and it is also an urgent need to achieve the “dual carbon” goal of the steel industry. (Ministry of Finance)