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Machinery Industry: A Preferential Policy To Stop The Implementation Of Income Tax

2008/8/15 8:45:00 12

Preferential Policies For Machinery Industry

Event: the State Administration of Taxation has issued a notice that it will suspend the implementation of preferential policies for enterprise income tax exemption from domestic equipment purchase starting from January 1, 2008.

Our view:

1. During the 9 years of implementation, the policy has greatly promoted the purchase of domestic equipment and technological pformation by Chinese enterprises.

But contrary to the principle of national treatment of WTO, this policy is honorable to conclude when the new enterprise income tax law is implemented.

Future countries may introduce other policies to encourage the purchase of domestic equipment.

2, the policy is clear that since January 1, 2008, the newly purchased domestic equipment will no longer enjoy preferential income tax credit. However, the issue of whether the enterprise will continue to be granted credit in the 2008 and subsequent years is not specified for those enterprises that have been approved or approved for income tax in 2007 or the previous year but have not yet reached the end of 07 and have purchased equipment for less than 5 years.

3, there are two points of view in the industry at present: (1) the credit can continue to be credited on the basis of the view that the [2008]52 is only applicable to newly purchased domestic equipment since December 31, 2007.

(2) it is not allowed to continue to be credited. It is based on the fact that the income tax on domestic equipment investment tax does not fall within the scope and scope of the excessive preferential policies in Guo Fa [2007]39.

We believe that the possibility of continuing credit is greater because the [2007]39 is applied to enterprises that formerly enjoy low tax rates and regular tax deductions and exemption. The purchase of domestic equipment is not in the scope of the corporate income tax. Therefore, second viewpoints can not be drawn.

4, income tax concessions have not been completely abolished, but from universal credit to specific credits.

The new enterprise income tax law stipulates that 10% of the amount of investment in special equipment used for environmental protection, energy saving, water saving and safe production can be credited from the tax payable of the enterprise in the current year. If the credit is insufficient, it can be credited in the next 5 tax years.

5, we believe that the abolition of preferential policies for the purchase of domestic equipment will have an impact on the enthusiasm of enterprises to purchase domestic equipment, and the tendency of enterprises to purchase imported equipment will rise in the future.

It has a certain degree of influence on China's machinery and equipment manufacturing enterprises.