How To Choose Raw Material Processing And Feed Processing

The processing of imported materials refers to the enterprises that have the right of import and export operation to purchase foreign raw materials, components, parts and packaging materials, and export them into finished products or semi-finished products through foreign exchange.

In the import processing trade, the customs generally exempts or imports the imported materials at a rate of 85% or 95%, and the goods export is calculated on the basis of "exemption, offset and refund".

The processing of raw materials, components and spare parts supplied by foreign businessmen is processed by our processing enterprises according to the requirements of foreign businessmen, and the finished products are sold to foreign businessmen, and the processing fees are charged by us.

In the processing trade, customs import and export goods are exempt from tax in full and export goods are exempted from value-added tax and consumption tax. Processing enterprises are exempt from value-added tax and consumption tax on processing fees.

Due to the different tax policies, the tax burden of the two processing methods is different, and the economic benefits of the processing enterprises will be affected. How can we choose between the two processing methods?

Examples are given below for analysis.

Case study: a company engaged in external processing business and domestic sales business, processing and exporting A products externally. The total cost of A products is: domestic material cost 10 million yuan, domestic cost 40 million yuan (wages, depreciation and other non entry tax).

1., the business adopts the processing method of imported materials. The export sales revenue of A products is 170 million yuan, and the cost of processing A products imported materials (customs tax exemption constitutes taxable price) is 100 million yuan, and the tax refund amount should be 1 million 500 thousand yuan in that year.

The export tax rebate policy of "exemption, offset and refund" shall be applied. The value-added tax exemption and offset of export processing goods shall not be subject to urban construction tax and education fee. The tax rate on A products is 17%, the export tax rebate rate is 13%, the urban construction tax rate is 7%, and the additional rate of education fees is 3%.

40 million yuan non deductible or tax rebate tax: 170 million yuan (17% 13%) - 10 million yuan x (10 million 17%) = yuan yuan; Xun (H) should pay VAT: - exemption, tax = [[export sales revenue - import material cost] * tax rebate rate - tax refund] = - (Yuan Yuan * - yuan yuan) = = - yuan; sales tax and additional = - exemption and tax amount x (+ +) = - yuan; (1) the sales revenue is 170 million yuan; the cost is 2 yuan. Among them, the cost of imported materials is 100 million yuan, domestic material cost 10 million yuan and other domestic cost.

2., the business adopts the processing method of incoming materials, and the processing fee is exempt from VAT. The consumption tax of domestic materials can not be deducted into the cost of export goods, and the processing cost of A products is 65 million yuan.

(1) income (processing fee): 65 million yuan; 2 yuan, sales cost: 51 million 700 thousand yuan, of which: domestic material cost: 10 million yuan, other domestic costs: 40 million yuan, domestic material input tax: 10 million yuan x 17% = 1 million 700 thousand yuan; (3) sales tax and additional: 0 yuan;

The comparison between 3. incoming processing and the way of incoming processing, and the selection of processing profit = sales revenue - sales cost - sales tax and additional.

Among them: feed processing: selling cost = import material cost + domestic cost + non deductible or tax rebate input tax, sales tax and add = = exemption tax amount * (urban construction tax rate + 3%); raw material processing: cost of sales = domestic cost + consumption of domestic materials input tax, sales tax and add = 0.

The profit of processing is equal to sales revenue - import material cost domestic cost - non deductible or tax rebate plus tax exemption amount (* urban construction tax rate + 3%); processing profit of material processing = domestic cost - domestic material input tax.

According to these two formulas, according to the comparison between the incoming processing and the raw material processing, according to the "domestic cost" of the general incoming processing and the incoming processing, the enterprises have the most profit in the way of feeding processing or incoming processing, and only need to compare the difference between the "sales revenue - import material cost - tax deductible or tax rebate plus tax exemption tax (+ urban construction tax rate + 3%)" and the difference between the "processing fee and domestic material input tax", and choose a large difference processing method.

In the two cases, the difference between the sales income and import material cost - non deductible or tax rebate plus tax exemption tax (+ urban construction tax rate + 3%) is 67 million 960 thousand yuan, which is greater than the difference between processing cost and domestic material input tax, and the profit of processing is 17 million 960 thousand yuan, which is more than 13 million 300 thousand yuan of raw material processing profit. Therefore, the company should choose the way of processing incoming materials.

To be a good judge