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2016 is the toughest year for paint companies?

Core Tip: 2016 is arguably the most difficult year for paint companies. On the one hand, some markets tend to be saturated, and sales of coating products are difficult to increase substantially; on the other hand, raw material prices continue to increase.


2016 is arguably the most difficult year for paint companies. On the one hand, some markets tend to be saturated, and sales of coating products are difficult to increase substantially; on the other hand, raw material prices continue to soar, and many paint companies are under pressure. The decline of China's economy, such as the paint companies with a lot of handcuffs and anklets, is struggling. In October, the Chinese government launched the most stringent real estate control policies, which directly affected the serious weakness of more than 80 related industries, and coating companies were implicated. Under the burden of many parties, the "death tax rate" will undoubtedly make paint companies worse.


The actual tax burden rate of Chinese enterprises is close to 40%. What does the 40% or 30% tax burden mean for enterprises? It means death, or it can be called “death tax rate”. Because in China, except for emerging industries and finance, most companies have a profit margin of less than 10%. 30%? 40% of the tax burden can lead some enterprises to be in trouble. Especially for this year's paint companies, raw materials have risen in transportation costs, costs have risen sharply, and product prices have risen hard, and huge tax rates may be the last straw to overwhelm paint companies.


In the past years, I have talked about China's macro tax burden, although the relevant departments have repeatedly proved by their own formulas that China's macro tax burden is not high, but in fact, if it is really unified, seek truth from facts, and put all the burden of tax burden All calculations, China's macro tax burden has already rushed to the Premier League. Responsible scholars mostly agree that China's macro tax burden should be between 37% and 40%, while the current US macro tax burden is less than 30%. Many years ago, the World Bank’s research showed that developing countries and developed countries have different “best macro tax burden levels”. According to the World Bank’s conclusion, the best macro tax burden in low-income countries is around 13%; In the middle and lower income countries, it is about 20%; in the middle and upper income countries, it is about 23%; in high-income countries, it is about 30%.


On January 26, 2015, the Ministry of Finance and the State Administration of Taxation issued the “Notice on the Collection of Consumption Tax on Coatings”. The “Notice” requires that the consumption tax be levied on coatings from February 1, 2015, and the applicable tax rate is 4%. At that time, a paint company owner with more than one billion sales said: "The net profit of the coatings company is a few points. If the consumption tax is 4%, the company will be very profitable." The boss said that if all enterprises All are taxed and everyone can accept it. The problem is that the tax collection will be levied according to the company's tax-included sales income, and large-scale paint companies must invoice, and there are more natural taxes. Many small businesses have rarely invoiced, and the consumption tax has little impact on them. This in turn suppresses the scale of formal paint companies, and promotes the barbaric growth of non-standard enterprises.


As a low-income country, China's macro tax burden has already surpassed many high-income countries. Under such a high tax burden, it is not easy for companies to survive, especially in the downturn of the overall economy and the market is sluggish today. I remember that in 2011, a research report by the National Research Institute of Peking University showed that since nearly half of the profits were invaded by taxes and fees, 72.45% of the small and medium-sized enterprises in Jiangsu and Zhejiang provinces were expected to have no profit or small losses in the next 6 months. Monthly operating confidence is low; 3.29% is expected to be significantly lost or closed in the next 6 months, which is pessimistic about future operations. In the case of falling profits and heavy tax burdens, some SMEs can only abandon the industry, and barely insist on doing business, most of them rely on tax evasion and tax evasion. Some companies are able to live, and indeed rely on tax evasion to survive.


A corporate tax director said that in the company's nearly 3 billion yuan of tax, the value-added tax (tax rate 17%) and corporate income tax (tax rate 25%) tax tax amount of more than 2 billion yuan, accounting for nearly 80% of the company's total tax payment .


Not only large and medium-sized enterprises feel that the tax burden is heavy, but small and micro enterprises also feel that the tax burden is not light. A small-scale enterprise with a sales of about 20 million in Zhejiang has a tax bill. The bill shows that in 2015, the total tax payment was about 550,000 yuan, including 126,000 VAT, 34,000 yuan in property tax, 138,000 land use tax, and social security. 101,000 yuan, other additional taxes including water conservancy fees, urban construction fees, etc., about 52,000 yuan.


Taxation is an important means for the government to intervene in the economy, but it is not the only means, nor is it a universal tool, and different taxes have different functional characteristics and functional priorities. Taxation means can not replace other policy tools to regulate the functional role of the development of the coatings industry. It is necessary to select tax policy tools according to objective needs. It is necessary to grasp the coordination of taxation and other policy instruments, and to avoid conflicting adjustments between tax categories. Strive to achieve the best combination effect with the best policy mix. The person in charge of a coatings company said: "Now the market business is difficult to do. It is hard to earn a little money and pay taxes. In the downturn of the market and rising costs, the government should reduce taxes and do not let the company bear the weight. Further increase has spawned a greater bankruptcy frenzy in the coatings industry.

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