Xyz Company the Export Tax Rebate
Essay Preview: Xyz Company the Export Tax Rebate
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XYZ-ML business model changes:
Company background:
XYZ corporation is a holding company established in Bermuda and established in 1993. XYZ-ML company is a productive wholly foreign owned enterprise established by XYZ company in mainland China. XYZ-ML company was founded in 1999, mainly engaged in the production and sales of baby buggy. XYZ -hk company is a 100% owned trading company established by XYZ company in Hong Kong
In 2002, we mainly purchased childrens toys from Asia Pacific and sold them to European and American customers.
XYZ – HK company in mainland China has not establishing agencies and offices, the members of its board of directors and senior management are resident in Hong Kong, the main trade negotiation, contract signing and other activities in Hong Kong or overseas, after several years of operation, XYZ – familiar with HK company for international baby products market, formed its own marketing channels, and accumulated a group of customers.
XYZ -ml company produces both A and B products, all of which are exported to overseas non-related party customers
XYZ-ML sells its own products and its original customers are introduced by the parent company. In order to expand the market, the sales staff of XYZ — ML company often participate in toy exhibitions around the world, and sometimes visit customers abroad. The annual sales expense for product A is about 1.2 million yuan. All products of B are sold in China and are independently developed by XYZ-ML company. After nearly ten years of operation, the sales staff of XYZ-ML company also have a better understanding of the international and domestic infant products market, and formed the companys marketing channels. In the international market, 40% of the clients of XYZ-ML company are the same as those of XYZ-HK company. In terms of customer service, XYZ-ML company also has a lot of duplication and lack of coordination with XYZ-HK company. XYZ group has been considering how to change that.
XYZ-ML company has the qualification of general taxpayer of value-added tax and enjoys the preferential corporate income tax rate of 15% in 2007. From January to December 2007, the following businesses took place in XYZ-ML company. It is estimated that the business scale will remain basically unchanged in 2008:
• the average fob price of product A is 200 yuan/piece (currency unit is RMB yuan, the same below), the accumulative export is 50,000 pieces, the unit price of product B is 150 yuan/piece, excluding tax, and the accumulative sales is 20,000 pieces;
• purchase of raw materials dedicated to the production of product A: import A1 raw materials in general trade, average cif price
100 yuan/kg, 50,000kg imported. Domestic purchase of A2 raw materials, excluding tax on average unit price of 50 yuan
/ kg, accumulated purchasing 20,000 kg;
• 2 million yuan of B1 raw materials specially purchased for the production of product B in China;
• 1 million yuan of raw material C for both A and B products purchased domestically;
• the above raw materials are purchased from non-related parties;
• the VAT rate for the above products and raw materials is 17%.
Note: tariff is not considered in this case study
The company is currently facing the new changes of export tax rebate policy:
Since July 1, 2007, the national export tax rebate policy has been significantly adjusted, in which the export tax rebate rate of product A and raw materials will be reduced from 17% to 9% (regardless of whether the products and raw materials belong to the prohibited and restricted categories of processing trade);
The competent foreign economic and trade department and the customs in the place where the XYZ — ML company is located shall examine and approve the qualified processing contracts of incoming materials and processing trade of incoming materials;
The competent national tax authorities in the place where the XYZ-ML company is located shall, in accordance with the “production enterprise export goods” tax exemption, credit and refund “tax management operation procedures”, require that the input processing business shall be calculated on the basis of the purchase method, that is, on the basis of the taxable price of all imported materials and parts purchased in the current period.
In the face of the new export tax rebate policy, in December 2007, chief financial officer of XYZ corporation Ronald, XYZ-
The financial controller of HK company Sally, the financial controller of XYZ -ml company Jimmy and the head of sales business held a meeting to discuss the countermeasures.
At the beginning of the meeting, Ronald introduced the main spirit of the previous headquarters operation meeting held by the company to the participants.
In 2007, affected by the us subprime mortgage crisis, the reduction of export tax rebate rate in mainland China, the appreciation of RMB against the us dollar and other factors, the groups overall profits declined significantly. In the next few years, companies and departments will be required to take measures to expand the market and save costs, according to the companys management. In order to further develop the domestic and foreign