Research On The Legal Issues Of Value Added Tax In China Commercial Factoring Industry

Commercial factoring plays an important role in helping small and medium-sized enterprises to finance,transfer the risk of collection,accelerate capital turnover,improve the financial status of enterprises,improve production and sales efficiency,and promote the construction of credit system.Currently,it has a good development prospects.However,with the rapid development of the industry and the adjustment of tax policy about “replacing the business tax with VAT”,the tax problems have gradually become more prominent.After the reform of “replacing the business tax with VAT”,many industries have lower tax rates and reduced tax burdens,but according to “Annual Report on the Development of China Commercial Factoring Industry ” issued by the Commercial Factoring Expertise Committee of CATIS in2017,the tax burden of commercial factoring companies has not decreased,but increased significantly.The imbalance beteween current tax laws and the development of commercial factoring,especially in VAT,restricts the further development of the commercial factoring industry.As the VAT policy of the commercial factoring industry has not yet been clarified,commercial factoring companies lack expectation of tax burden on the business development process,and face operational risks caused by uncertain tax burdens.Based on the policy background that our country encourages financial institutions and commercial factoring institutions to provide accounts receivable financing services for small and medium-sized enterprises,this paper discusses the legal system of VAT that conforms to the characteristics ofindustry and specific business essence on the premise of following the basic principles of tax law and ensuring national tax benefits.This paper analyzes the current VAT legal issues in the two factoring modes,such as general commercial factoring and factoring asset securitization.In the general factoring business,the definition of “loan service” and “financial commodity transfer”is vague,which results in unclear VAT items on commercial factoring business.The tax authorities verbally replied that the taxable behavior of the commercial factoring industry belongs to loan service in categoties of taxation.However,this ignored the characteristics and essence of different types of factoring business.This paper analyzes the difference between loan service and financial commodity transfer tax items,except for the transaction principal,the biggest difference is that loan service is guaranteed income,which requires the risk of loan recovery.The transfer of financial commodity obtains non-guaranteed income,which requires the risk of price rise and fall of transaction object.Combined with the characteristics and essence of factoring,the tax items of recourse factoring and non-recourse factoring are analyzed.In addition,in public factoring transactions,the goods,invoice and funds in the commercial factoring business do not correspond to each other,which inconsistent with the VAT invoicing management regulations,and brings the tax risks of the falsely issuing VAT invoices to the factoring practitioners.The main financing cost of commercial factoring can't be deducted,which breaks the chain of VAT deduction in the factoring industry and leads to serious double taxation.In the factoring asset securitization business,there are still problems such as the unclear taxpayer and invoice payers of the basic transaction,and the break of VAT chain caused by seeing administrator as the taxpayer.While raising questions,this paper combines the basic principles of tax law,the characteristics of business factoring industry and business essence,proposing to enact special taxation regulatory documents,which clearly stipulates the taxation issues of commercial factoring from the following aspects: On the issue of tax items,the “loan service” tax term can be applied to the factoring with recourse,and the “financial commodity transfer” tax term is applicable to the factoring with non-recourse.Second,the taxation and invoice payer can be judged at the basis of transaction.Third,on the problem of deduction,the commercial factoring industry should be allowed to deduct interest expenses before ratepaying.In addition to the special regulations,since the legal problems of VAT in the commercial factoring industry are not only caused by the characteristics of the industry,but also related to the VAT system,it is necessary to improve the regulations of VAT on the asset securitization and invoice management.In order to avoid confusion,it is recommended that the taxation and invoice obligations in the basic transactions are not be transferred with the transfer of the underlying assets,and change the taxpayer from custodian to Specific Asset Management Plan in taw law.In terms of invoice management,it is suggested to judge whether taxpayers has made out specialized VAT invoice also from transaction information.If the truthfulness,reasonableness and legitimacy of the third-party transaction object can be proved,in other words,there are two real trade foundations.It is not formally recognized as falsely making out specialized VAT invoice.