Logistics Industry: A Brief Comment on the Impact of the Expansion of the VAT Reform Pilot on Logistics

 

       In terms of short-term profit impact, the railway is positive, the road is negative, but there is a large government subsidy, which has a small negative impact on logistics. The newly added 10 provinces and cities involved the listed companies covered by us: Ninghu Expressway, Zhejiang Shanghai-Hangzhou-Ningbo Expressway (H), Anhui Expressway Expressway, Chutian Expressway, Jianfa Shares, Guangshen Railway, Yuexiu Transportation ( H) and Shenzhen Expressway, we expect the negative impact on the annual profitability of the road industry is about 1% to 7%, mainly because the tax rate is increased from 3% of the business tax to 6% of the value-added tax, but the cost can be deducted. Less caused. Among them, Zhejiang Shanghai-Hangzhou-Ningbo has the least negative impact on earnings, which is about 1%; Chutian Expressway and Yitong Expressway have the largest negative impacts on earnings, 7.0% and 6.5% respectively; for Guangshen Railway, we expect to generate about 4% positive. The impact is mainly due to the fact that the railway industry can deduct more items. See Figure 1 for details. However, with reference to the situation of Shanghai Port Group and Shanghai Airport, the government has a greater opportunity to subsidize the increase in taxation during the pilot process, so the actual impact will be less than the theoretical value we measured. At the same time, we have measured the profit impact of the listed logistics companies by the pilot. On average, there will be a negative impact on the small profit of about 2%. Please see the chart 2 of our report.

In the medium term, it will reduce the cost of social logistics and improve the profitability of the logistics industry. However, with reference to the situation in Shanghai, the profitability of logistics enterprises will be a process of bitterness and sweetness. The expansion of the pilot scope will increase the deductible input tax range, which will help reduce the burden on logistics enterprises and the overall logistics cost of society. However, in the current economic weakness, overcapacity, industry sprawl and irregular tax management, we believe that the profitability of the logistics industry will have a process of bitterness and sweetness.

The negative impact of initial earnings, tax is difficult to pass effectively. If the logistics is simply divided into three parts: warehousing, freight forwarding and transportation, since the first two tax rates are only converted from 5% business tax to 6% VAT, the actual impact is small; and from 3% business tax to 11% The impact of the value-added transport industry is very obvious. Taking standard container road transportation as an example, the fee is about 650 yuan / 100 kilometers, and the downstream customer tax is reduced by 26 yuan after the tax reform; while the transportation company is less than the deductible input tax, the tax is increased by about 12 yuan, and the chain is integrated. The total tax has dropped by 14 yuan, so it is beneficial to reduce logistics costs (Table 4). However, because the transportation industry is similar to a completely competitive market, in the current situation of insufficient demand, we believe that the cost of rising taxes before the economic recovery is difficult to pass effectively.

The positive effect in the medium term began to appear, and the increase in competitiveness led to an increase in market concentration. The gradual increase in deductible items led to a decline in tax costs and an increase in profitability.

In terms of logistics enterprises, although the profitability of short-term enterprises may be negatively affected, the competitiveness of logistics services is enhanced by the possibility of issuing VAT tickets. On the downstream enterprises, due to the benefits of outsourcing, it is possible to further expand the scale of outsourcing and promote formalization. The expansion of the market share of transportation companies. At the same time, the scope of the tax pilot and the expansion of the region will enable the logistics enterprises to deduct the increase in input tax, thereby reducing the cost of taxes and fees and raising the level of profit margins. Therefore, in the medium term, the profitability of formal logistics enterprises will have a development process that has bottomed out.

Long-term is conducive to the optimization of the industry pattern, but it takes a long time to complete from the current situation. For small and micro enterprises, the unified 5% business tax is changed to 3% VAT. The intention of encouraging small enterprises to develop and formalize is very obvious. In the future, downstream customers will outsource their business to logistics or supply chain companies, and then outsource to fine. A professional small-scale enterprise with advantages in the market will improve the overall chain operation efficiency and reduce operating costs. However, considering: 1) the government has the determination to change the tax, but the power is slightly insufficient. For example, the basis of the tax rate is still that the total tax revenue does not decrease significantly, rather than how to encourage the operation of the enterprise more efficiently; 2) the logistics industry At present, the pattern is still very scattered. The low-end market tax management is still dominated by vicious price competition. We believe that this gradual process still takes a long time to complete. If the tax rate can be lowered and unified, it will lead to an industry-expected development opportunity.