This paper introduces the tax treatment of construction value-added tax and enterprise income tax, and summarizes eight tax-related risks。
I. VAT prepaid tax
(1) Place of pre-payment
1.Off-site advance payment
 If construction services are provided across counties (cities or districts) outside the same prefecture-level administrative region, tax shall be paid in advance by the competent national tax authority where the construction services take place。(State Administration of Taxation Announcement No. 17, 2016, No. 11, 2017)。
2.Advance collection and advance payment
 If construction services are provided across counties (cities or districts) within the same prefecture-level administrative region, the tax shall be paid in advance by the competent national tax authority where the institution is located; otherwise, the tax shall be paid in advance where the construction services occur。(Finance and Taxation [2017] No. 58)
(2) Calculation formula
1.General taxation
Tax payable in advance =(total price and out-of-price charges - subcontract payment) ÷(1+11%)×2%
2.Simple tax calculation
Tax payable in advance =(total price and out-of-price charges - subcontract payment) ÷(1+3%)×3%
(3) Pre-payment time
The advance payment obtained in the current month shall be paid in advance before the declaration period of the following month。
 
Second, VAT tax declaration
(1) The time when the tax obligation occurs
The taxable act of the taxpayer occurs and the sales proceeds are received (the taxpayer receives the proceeds during or after the completion of the sales service) or the day on which the evidence to claim the sales proceeds is obtained (the payment date determined in the written contract;If no written contract is signed or the date of payment is not specified in the written contract, the date of completion of the service shall be the day.)。If the invoice is issued first, it is the day on which the invoice is issued。
(2) Sales volume
1. General tax calculation: The total price and non-price expenses obtained are sales。
2.  Simple tax calculation: the balance of the total price and out-of-price expenses obtained after deducting the subcontract payment。
 The simplified tax calculation continues to follow the difference tax provisions of the original business tax, and the subcontract payment can be deducted。Simple tax calculation project is not allowed to deduct the input tax, if the project has layers of subcontracting, and does not implement the difference tax calculation, there will be a problem of double tax, the policy stipulates that simple tax calculation can implement the difference tax。The general tax calculation shall not deduct the subcontract payment, and the input tax shall be deducted by the special invoice, which will not cause the problem of double tax payment。Therefore, the general tax calculation is full tax calculation, which can be deducted from the input tax;Simple tax calculation is not deductible input tax。
(3) Tax rate
 1. General tax :11%
 2. Simple tax: 3%
(4) the place of declaration
The competent national tax authority where the institution is located (where other individual-to-construction services occur)
 
3. Enterprise income tax
 
(1) The time when the tax obligation occurs
The provision of construction services by the construction industry belongs to the provision of labor income，Article 23 of the Regulations for the Implementation of the Enterprise Income Tax Law，Enterprises are commissioned to process and manufacture large machinery and equipment, ships and aircraft, and engage in construction, installation and assembly engineering business or provide other labor services，Lasting more than 12 months，The realization of income is recognized according to the progress of completion or the amount of work completed during the tax year。
 
(2) Tax payment in advance
The income tax collection and administration of trans-regional construction enterprises shall be handled in accordance with the provisions of No. 156 of the National Tax Letter [2010]. The cross-regional project department directly managed by the head office of the construction enterprise shall be based on 0. 0 of the actual operating income of the project.The head office shall pre-distribute the enterprise income tax to the location of the project on a monthly or quarterly basis, and the project department shall pre-pay it to the local competent tax authority。
  (3) Tax declaration
 The announcement of the State Administration of Taxation on the issuance of the "Measures for the Administration of Income Tax Collection of Enterprises operating across Regions in Summary tax payment" (The State Administration of Taxation Announcement No. 57, 2012) The announcement is mainly applicable to cross-provincial branches, and the announcement stipulates that the cross-city branches in the province shall be formulated by the provinces themselves。Anhui Province is No. 12 announcement in 2013, which stipulates that the city shall formulate its own measures for cross-county and differentiated companies。
 Article 24 An unincorporated branch carrying out production and business operations in the name of the head office，It is not possible to provide a summary income tax distribution table for corporate branches，It is also unable to provide relevant evidence as provided in Article 23 of these measures to prove the identity of its secondary and lower branches，Enterprise income tax shall be calculated and paid locally as if it were an independent taxpayer，The relevant provisions of these Measures shall not be implemented。
 The independent taxpayer status of a branch that is regarded as an independent taxpayer according to the provisions of the preceding paragraph shall not be changed within one year。
 
4. Tax-related risks in the construction industry
 
(1) Simple tax calculation does not meet the provisions
1.Non-simplified tax calculation shall apply
The general contractor of the construction project provides engineering services for the foundation and foundation of the building construction and the main structure, and in the case of the construction unit purchasing all or part of the main building materials by itself, the simple tax policy is applicable。
 Note: the general contractor of the construction project, not the subcontractor;The provision of engineering services, rather than services such as decoration, is to ensure that construction enterprises "should enjoy" the simple tax assessment policy。
2.Items that should not be taxed easily will be taxed easily
Options for simple tax calculation include:
(1) Cleaning workers
General taxpayers who provide construction services in the form of contract construction may choose to apply the simple tax calculation method for tax calculation。The provision of construction services by contract means that the construction party does not purchase the materials required for the construction project or only purchases auxiliary materials, and charges labor costs, management fees or other costs for construction services。
(2) A material supply
  General taxpayers may choose to apply the simple method of tax calculation for the construction services provided by A project。"A supply project" refers to a construction project in which all or part of the equipment, materials and power are purchased by the project owner。
General taxpayers provide installation services while selling elevators, and the installation services can be calculated according to the simple tax calculation method selected by the project A。
(3) Old projects
For the construction services provided by general taxpayers for old construction projects, they may choose to apply the simple tax calculation method。
3.In order to expand the amount of subcontract, sell self-produced goods and be responsible for the installation of all installation services invoice。

(2) The revenue is recognized in advance, and the sales revenue is recognized when the advance payment is received
As of July 1, 2017，The time when the tax obligation of the construction industry arises is changed from the time of collection to the time when the taxable act occurs and the sales proceeds are received (the taxpayer receives the proceeds during or after the completion of the sales service) or the day on which the evidence to claim the sales proceeds is obtained (the payment date determined in the written contract;A written contract is not signed or the written contract does not specify the date of payment，On the day the service is completed)。If the invoice is issued first, it is the day on which the invoice is issued。(Finance and Taxation [2017] No. 58)

(3) Tax calculation or pre-payment of the difference does not comply with the provisions
1.The difference when pre-paid or declared is deducted from the material invoice obtained from the subcontractor
Example: Company A contracted a project, the application of simple tax calculation, the project received project payment income of 2 million yuan in the month, paid 1 million yuan to subcontractor company B, and obtained the name of "steel bar" ordinary VAT invoice, including tax amount of 1 million yuan。The material invoice cannot be deducted when Company A pays tax in advance。

2.Failure to submit information when pre-paying value-added tax as required
Taxpayers provide construction services across counties (cities, districts)，When the tax is paid in advance to the competent national tax authority in the place where the construction service takes place，The following documents should be submitted: VAT Pre-payment Form, copy of construction contract signed with the employer (stamped with the taxpayer's official seal), copy of subcontract signed with the subcontractor (stamped with the taxpayer's official seal), copy of invoice obtained from the subcontractor (stamped with the taxpayer's official seal)。(General Administration Announcement No. 53, 2016)
3.In the same prefecture-level administrative region, the advance payment is received, and the VAT is not paid in advance at the location of the institution
The taxpayer who obtains the advance payment for providing construction services shall, upon receipt of the advance payment, pre-pay the VAT at the prescribed advance rate on the balance of the advance payment after deducting the subpayment paid。For items that should be paid VAT in advance at the place where construction services take place according to the current regulations, the taxpayer shall pay VAT in advance at the place where construction services take place when receiving the advance payment。For projects that do not need to pay VAT in advance at the place where construction services take place according to the current regulations, the taxpayer shall pay VAT in advance at the place where the institution is located when receiving the advance payment。(Finance and Taxation [2017] No. 58)
4.When the difference is paid in advance, the pre-paid tax is not deducted separately according to the project。
Example: Both A and B projects are cross-county (city, district) projects outside the scope of the same prefecture-level administrative region，Simple tax is applicable，Project A is not subcontracted，Received project payment income of 2 million yuan in the month，B project is subcontracted，No project payment income was obtained in the month，However, a subcontract payment of $1 million was made to the subcontractor，The construction services invoice was obtained。
1 million yuan of Project B cannot be deducted when Project A pays tax in advance。The construction service invoice obtained by Project B from the subcontractor shall indicate in the remarks column the value-added tax invoice of the county (city, district) where the construction service occurs and the name of the project。
(4) Tax the difference on illegal subcontracting and subcontracting
Subcontracting refers to the act of contracting out part of the contracted construction project by a general contractor to a qualified contractor in accordance with the law. The general contractor does not withdraw from the contracting relationship and is jointly and severally liable to the developer for the work results completed by the third party。Illegal subcontracting includes:
1.The general contractor subcontracts the construction project to a unit that does not have the corresponding qualifications;
2.Where there is no agreement in the general contract for a construction project, nor approval by the construction unit, and the contracting unit transfers part of the contracted construction project to another unit for completion;
3.The general construction contractor subcontracts the construction of the main structure of the construction project to other units;
4.The subcontracting unit subcontracts the construction project it has contracted。
5.Engage other individuals as subcontractors, other individuals do not have construction qualifications, can only engage in simple primary engineering work。
Subcontracting refers to the act that a contractor, after contracting the project, transfers the contracted project construction task to a third party, the transferor withdraws from the contracting relationship, and the transferee becomes the other party to the contract。According to Articles 24, 28 and 29 of the Construction Law of the People's Republic of China, subcontracting a contracted project is prohibited。

(5) The basis for tax calculation of materials supplied by A is inaccurate
1.The basis for tax calculation includes when the nail is supplied
When the materials supplied by A are used as part of the project payment, Party A purchases them and gives them to the construction enterprise for use, and deducts part of the project payment, the tax basis shall include the materials supplied by A。If the project cost is 10 million yuan, Party A actually pays 6 million yuan, and the remaining 4 million yuan of A-supplied materials is deducted from the maximum project cost, the tax basis shall be 10 million yuan。If Party A uses materials supplied by A to offset the project payment, it belongs to the ownership of goods sold with compensation. 4 million yuan shall be the income and VAT shall be paid.After Party A collects taxes, the construction enterprise can receive normal deduction of input tax。
2.The basis for tax calculation does not include the time when nails are supplied
The materials supplied by A have nothing to do with the project payment, and Party A shall pay the project payment separately after purchasing the materials to the construction enterprise。For example, the project money is 6 million, the first material is 4 million, and the tax basis should be 6 million。

(6) The risk of falsely issuing special VAT invoices
1.Let the cement factory write false cement invoices for him
Construction enterprises to the mixing station to buy cement concrete, cement concrete 30% of the composition is cement, mixing station using simple collection, can not deduct 17% of the input invoice, therefore, cement invoice issued to the construction enterprise, construction enterprise accounts to buy cement self-mixing。
 
2.Falsely invoicing special VAT invoices in the name of affiliation
Affiliated operation refers to the operation mode in which an enterprise, partnership organization, etc., reaches an attachment agreement with another business entity, and the affiliated party usually conducts business activities in the name of the affiliated party, and the affiliated party provides services in terms of qualification, technology, management, etc., and regularly charges the affiliated party a certain management fee。The relationship of affiliated management is essentially a borrowing relationship, and the content of this borrowing relationship is mainly embodied in the borrowing of intangible property such as qualification, technology and management experience。As far as qualifications are concerned, there is the borrowing of qualification certificates of management personnel such as unit qualifications and engineering technology。
3.The labor dispatch company falsely invoiced the labor service without providing real labor service。
Pay a certain proportion of the invoice amount to the labor dispatch company, and falsely invoice the labor service without providing real labor service, resulting in the labor personnel and villagers who actually provide labor service pay less tax。
In accordance with Article 41 of the Measures for the Administration of Invoices, those who violate the regulations on the administration of invoices and cause other units or individuals to fail to pay, underpay or defraud tax shall have their illegal gains confiscated by the tax authorities and may concurrently impose a fine of not more than one time of the unpaid, underpaid or defrauded tax。
The construction company must sign a labor subcontract with the affiliated labor company, which clearly indicates that the construction company will pay the wages of rural migrant workers on behalf of the labor company, and the construction company must sign a labor contract with each migrant worker in the name of the affiliated labor company。
4.The detailed list of goods issued by the anti-counterfeiting tax control system is not obtained
The special VAT invoice with the name of "a batch of goods, see the list for details" has not obtained the detailed list of goods issued by the anti-counterfeiting tax control system. After comparison, the detailed list of the buyers and sellers does not match, and there is the risk of letting others falsely open (for themselves) the special VAT invoice。

(7) No or less deduction of individual income tax
1.A large number of construction engineer, cost engineer certificate fees, external technical personnel to make tenders, budget quotes and other expenses are paid by the falsified salary table of management personnel without withholding personal income tax。
2.The applicable tax rates for other individuals who obtain remuneration for various services from construction enterprises are 20%, 30%, and 40% (income paid below 4000 is deducted by 800 and multiplied by 20%;The tax rate above 4,000 is reduced by 20%, and the tax rate above 20,000 is 2
0%, the tax rate of 20,000-50000 is 30%, the tax rate of more than 50000 is 40%, and the invoice amount has been issued by the tax bureau when the invoice is issued.5% of the individual income tax paid in advance, the underpaid part should be deducted and paid。
(8) Signing contracts at will and failing to timely confirm VAT payment obligations
The VAT tax liability of the construction industry shall occur on the day when the taxpayer performs the taxable act and receives the sales proceeds (the taxpayer receives the proceeds during or after the completion of the sales services) or obtains the evidence to claim the sales proceeds (the payment date determined in the written contract;A written contract is not signed or the written contract does not specify the date of payment，On the day the service is completed)。If the invoice is issued first, it is the day on which the invoice is issued。If a written contract is signed and the written contract specifies the date of payment, the tax liability shall be recognized on the day of the payment period confirmed in the written contract。