The Industrial Bank (IB) has implemented the policy of “replacing business tax with value-added tax” for two months from May 1 to June 30, 2016, during which IB has totally issued 664 invoices specially for value-added tax with the total invoiced amount of RMB 142 million, resulting to RMB 16.52 million of total deducted taxes from input items enjoyed by enterprise clients. The cost has been reduced and policy benefits have been enjoyed directly.
Currently, IB is one of the two Chinese banks that are capable of issuing value-added tax invoices by directly linking the value-added tax management system with the production system.
As stated by national taxation system reform policies, starting from May 1, 2016, taxpayers of business taxes in four major sectors, i.e. the financial, real estate, construction and life service sectors, will be included as experimental subjects of the “replacement of business tax with value-added tax” (the Replacement). In addition to addressing repeated tax levy caused by the system of business tax, thus reducing tax burden for enterprises, the Replacement also requires enterprises to adjust their production, operation and management according to the features of this new tax system.
The head of Planning Finance Department of IB said, for a commercial bank, the preparation work for the Replacement means not only the change of organizational structure, sorting of suppliers, redesign of business procedures, change of accounting management, revision of contracts, personnel training, equipment procurement and some other common challenges of enterprises, but also a great deal of complex reconstruction workload of IT system.
As introduced, in order to allow clients to enjoy policy benefits and gain tax deductions from input items, IB started the preparation work for the Replacement in the fourth quarter of 2014. After forceful arrangement, heavy input and progressive adjustment and trial operation of all related systems, more than 20 reconstruction items in production and professional systems have been completed by May 1, 2016.
By virtue of experienced financial management and strong technological capability, IB has independently developed a fully proprietary value added tax management system which enables invoice issuance by directly linking the value added tax system, the production and trading system and the national gold and tax system. This mode provides security in terms of system management to prevent omissive, wrong, false and repeated invoice issuance, fundamentally ensures the legality of IB to issue value added tax invoices for clients, addresses diversified needs of clients in invoice issuances and makes sure that all enterprise clients will enjoy tax deduction by presenting value added tax invoices. IB therefore becomes one of the two Chinese banks that are capable of issuing value-added tax invoices by directly linking the value-added tax management system with the production system.