With the development of economy in some areas, the administrative level of these areas is often promoted. It is more common that counties are changed to cities, counties are changed to districts, and county-level cities are upgraded to prefecture level cities.

Sometimes, the merger or division of administrative divisions will happen in two adjacent regions, leading to the change of administrative divisions.

Can the change of administrative divisions provide space for tax planning? The answer is yes.

The detailed rules for the implementation of the Provisional Regulations on value added tax stipulate that taxpayers who have more than two institutions and carry out unified accounting shall pfer goods from one organization to other institutions for sale, while pferring links shall be regarded as sales, except those with relevant institutions located in the same county (city).

The requirement of sale is defined by county (city) zoning. Therefore, the allocation of goods between agencies with unified accounting has the possibility of tax planning.

The following is an example.

The city of A, a provincial capital city, has been approved by the B County adjacent to another area and its B county has been upgraded to the B area of A city.

The original B County C enterprise is a beverage enterprise, the product sells the place in A city.

C enterprises have branches of unified accounting in all districts of A city.

Before the B county was put into A City, the beverage of the branches of the C enterprise allocated to A city was sold in the branches of the branch even though it was not sold.

What impact will this have? First, it should be regarded as sales, and the value added tax will be paid when pferring. Accordingly, a certain amount of capital will be occupied (Shui Jin), resulting in slow flow of capital.

Secondly, because its branches are not ordinary taxpayers, the input tax can not be deducted, and the value added tax should be paid at the rate of 4%, thus forming a "double" tax, which makes C enterprises deeply hurt.

Compelled to do so, C enterprises sell a large part of their products to other non affiliated enterprises, which is not conducive to maintaining price stability, but also affecting the market share of products.

With the adjustment of administrative divisions, B county has become the B area of A city. C enterprises and their branches are in the same city. The goods pferred by C enterprises to branches are not regarded as sales, and branches do not pay taxes by "double".

C enterprises sell all their products to branch offices to ensure better profits.

From the above analysis, we can see that enterprises should make full use of the changes in administrative divisions and reasonably set up related institutions so as to save taxes and fees.

Note: taxpayers should pay attention to the fact that the inter agency pfer of goods stipulated in the detailed rules for the implementation of the Provisional Regulations on value-added tax is regarded as sales, with the county (city) as the boundary, and the provisions of counties (cities) are different in execution.

If the municipality directly under the central government stipulates that the pfer of goods within the city limits is not the same as sales, there is no distinction between counties and districts.

Therefore, taxpayers should have a detailed understanding of specific regulations.

Wei