How to understand that fixed assets can be deducted, can you give an example

Since January 1, 2009, the VAT transformation reform has been implemented in all regions and industries across the country. The main contents of the reform are: allowing enterprises to deduct the value-added tax contained in the newly purchased equipment, and at the same time, canceling the value-added tax exemption for imported equipment and the value-added tax refund policy for foreign-invested enterprises purchasing domestic equipment, reducing the value-added tax collection rate for small-scale taxpayers to 3%, and restoring the value-added tax rate for mineral products to 17%.

It is estimated that the implementation of the reform next year will reduce the value-added tax revenue of about 120 billion yuan, the income of urban maintenance and construction tax of about 6 billion yuan, the additional income of education fees of about 3.6 billion yuan, and increase the enterprise income tax by about 6.3 billion yuan, and the increase and decrease will reduce the tax burden of enterprises by about 123.3 billion yuan.

For example, the account is treated in the same way as the deductible account for the purchase of ordinary goods, with the slight difference being that you add a "Input Tax on Fixed Assets" under the "Tax Payable - VAT Payable" account to show the difference.

For example: borrow: fixed assets 10000

Tax payable - VAT payable - input tax on fixed assets 1700 credit: bank deposits 11700

The value-added tax reform has changed from production-oriented to consumption-oriented, and the value-added tax contained in fixed assets can also be deducted, and the value-added tax burden of enterprises has been reduced.

On October 5, 2009, the company purchased a production equipment, with a special VAT invoice price of 50,000 yuan, a value-added tax of 8,500 yuan, and a transportation fee of 2,000 yuan. Fixed assets do not need to be installed, and the legal VAT deduction certificate has been obtained, and the payment is paid by bank deposit.

Debit: fixed assets 51860 (50000 + 2000 93%) tax payable - VAT payable (input tax) 8640 (8500 + 2000 7%)

Credit: Bank Deposit 60500

a. According to the provisions of the Provisional Regulations on Value-Added Tax, the Detailed Rules for the Implementation of the Provisional Regulations on Value-Added Tax and the Document No. 113 of the Ministry of Finance and Taxation (2009), the scope of input tax credit for fixed assets involved in fixed assets is: all fixed assets such as machinery, machinery and means of transportation used for taxable items can be deducted from the output tax; Only the input tax on fixed assets that are specifically used for non-taxable items, tax-exempt items, collective welfare or personal consumption shall not be deducted; The input VAT on the purchase of fixed assets such as buildings, structures and ancillary equipment and facilities shall not be deductible.

b. Which ancillary equipment and supporting facilities cannot be deducted from the input VAT value-added tax?

The Notice of the Ministry of Finance and the State Administration of Taxation on Issues Concerning the Deduction of Input Tax on Fixed Assets [2009] No. 113 clarifies that the input tax of ancillary equipment and supporting facilities of buildings and structures is not allowed to be deducted, and the ancillary equipment and supporting facilities with buildings or structures as the carrier, regardless of whether they are separately booked and accounted for in the accounting treatment, shall be regarded as an integral part of the building or structure, and the input tax shall not be deducted from the output tax. Ancillary equipment and supporting facilities refer to: water supply and drainage, heating, sanitation, ventilation, lighting, communications, gas, fire protection, air conditioning, elevators, electrical, intelligent building equipment and supporting facilities.

2. Therefore, not all fixed assets can be deducted, depending on the situation, we will pick out the fixed assets that cannot be deducted from the above.

a. The input tax on fixed assets specially used for non-taxable items, tax-exempt items, collective welfare or personal consumption shall not be deducted; The input VAT on the purchase of fixed assets such as buildings, structures and ancillary equipment and facilities shall not be deductible.

b. The components of the building: air conditioning, elevators, electrical, intelligent building equipment and supporting facilities. (Monitoring Equipment).

Legal analysis: After the VAT is deducted from fixed assets, the VAT amount indicated on the special VAT invoice obtained by the original general VAT taxpayer for the purchase of services, intangible assets or immovable property is the input VAT amount, which is allowed to be deducted from the output VAT. The input VAT shall be deducted from the output VAT in 2 years from the date of acquisition, with the deduction ratio of 60% in the first year and 40% in the second year.

Legal basis: Article 10 of the Provisional Regulations of the People's Republic of China on Value-Added Tax The input VAT of the following items shall not be deducted from the output VAT: (1) Purchased goods or taxable services used for non-VAT taxable items, VAT-exempt items, collective welfare or personal consumption.

Measures for the Implementation of the Pilot Project of Replacing Business Tax with Value-Added Tax》 Article 27 The input VAT of the following items shall not be deducted from the output VAT: (1) Purchased goods, processing and repair services, services, intangible assets and immovable property used for taxable items under the simplified tax calculation method, value-added tax exempt items, collective welfare or personal consumption.

OK.

As long as it is a fixed asset within the deductible range stipulated in the tax law, it can be deducted from the input tax.

For example, in the following example, the original value of the equipment is 1.2 million yuan and the annual depreciation is 120,000 yuan, and the annual depreciation is 120,000 yuan. When the input tax can be deducted, the VAT is directly deducted and the VAT payable in the current period is reduced, for example, the VAT should be paid in the current period of 1 million yuan, and the VAT should be deducted here is 10,000 yuan, then you only need to pay 10,000 yuan. In the current period, you can reduce the cash flow of 10,000 yuan, and the value-added tax is not included in the profit and loss statement, which does not affect the profit and loss, so it has nothing to do with income tax.

When the input tax is not deductible, then the input tax corresponding to 10,000 yuan, will be transferred to the cost of the product by increasing the depreciation amount of the asset depreciation period, and finally enter the increase in the cost of the main business, affecting the reduction of profits, the amount of enterprise income tax, regardless of the time value, 10,000 yuan through the period of 10 years, the annual increase in depreciation of 10,000 yuan, the total increase in depreciation in 10 years, the reduction of total profit of 10,000 yuan, the reduction of income tax = 10,000 yuan, far less than the direct deduction of 10,000 yuan, What's more, the time cost of 10 years (capital into money) is not small, in layman's terms, that is, when it is deductible, the money you hand over to the state can be less than 10,000 yuan, and when it is not deductible, you can only pay less than 10,000 yuan (regardless of the cost of time), and the two are compared, you can know that the money you give to the state when it is deductible is less, and of course the tax burden is low. As for the financial analysis you mentioned, the impact of this piece on the deduction or non-deduction is not significant, and it is mainly considered from the aspect of reducing the tax burden, so it is changed to deductible.

1. The value-added tax (input tax) at the time of purchase of fixed assets is not included in the initial measurement cost of fixed assets, so this does not affect the depreciation expense.

2. Example: Purchase a 1.2 million device with a service life of 10 years and no residual value. Then, the input tax is 10,000.

The problem is here, the cost of fixed assets of this equipment can only be 1.2 million, with annual depreciation of 120,000 and monthly depreciation of 10,000. If it is not deducted, the depreciation amount is still the same as the deductible, and you will have to pay an extra 10,000 VAT. That's definitely going to be deducted.

This has nothing to do with depreciation or income tax. I think you have misunderstood the recorded value of fixed assets, and the input tax credit is about deducting VAT output tax, not deducting the recorded cost.

The first case: deducting the input tax on fixed assets to reduce the VAT payable and expand the net cash flow, yes. The second scenario:

It is not wrong to reduce profits by not deducting input tax on fixed assets, and it is not wrong to reduce income tax and increase net cash flow. But the premise of the second case is that the profit is reduced! Enterprises pursue profits, not cash flow statements.

It can be said that the more income tax in the cash outflow, the better, because the more income tax is paid, the more profit of the enterprise. The pursuit of large net cash flow should not be used to destroy the real cake of corporate profits. After all, the cash flow statement is only for the purpose of analyzing whether the project is viable or not.

As long as the project is viable. On the premise that the project is viable, the greater the profit, the better. Moreover, although depreciation is not reflected in the cash flow statement, the deductible input tax that should be borne by the state is borne by the enterprise itself in the form of depreciation as a cost, and it must be a loss.

If you use a practical example, you can see that although one reduces VAT and the other reduces income tax, even without considering the time value, the former will make the corporate tax burden smaller.