With the business tax relief expectation and VAT discounts landing favorable, the software industry is expected to obtain “big red envelopes†in the fourth quarter. After the Ministry of Finance and the State Administration of Taxation jointly issued the "Notice on Value-Added Tax Policies for Software Products," Shanghai also reported that it is studying the business tax reduction of software companies. Insiders pointed out that if the business tax reduction rules are implemented nationwide, the software company's profit will increase by about 8%.
Although the policy was favorably released, the performance of most software companies fell to the industry average. In the first three quarters, the revenue growth of the software industry reached 31.7%, while the revenue growth of software-listed companies was only 21.43%. Analysts pointed out that despite policy support, software companies still need to find new growth points in the future.
Although the Ministry of Industry and Information Technology released the “New 18th Document†in the beginning of this year, it explicitly stated that software VAT refunds are due to the fact that the relevant rules of the State Administration of Taxation have not been published. Software companies cannot receive revenue from VAT refunds for the first three quarters of this year. The industry generally appears that "increasing income does not increase profits."
Due to the delay of VAT refund, the growth rate of net profit of software companies in the first three quarters was lower than that of operating income. According to statistics, at present there are 74 computer application companies in the first three quarters of net profit growth rate of 9.48%, while operating income growth rate of 21.43%.
Analysts pointed out that the return of VAT tax revenue is confirmed or concentrated in the fourth quarter, when many companies will reverse their performance in the fourth quarter. Industry insiders expect that in the fourth quarter, the software industry will honor the full value-added tax return, and the overall growth of the industry is expected to increase by 10%.
“The company’s revenue from software products is relatively high.†Analysts believe that the value-added tax (VAT) benefits and future business tax exemption policies mainly benefit software products, while in computer application companies, actual software products account for different proportions. On the contrary, hardware products account for a relatively large amount, and such companies are less stimulated by tax incentives. According to this person, in some provinces, the return of value-added tax is regarded as non-operating income and it is necessary to refinance income tax. In some areas, the value-added tax return part is regarded as a “policy red envelope†that is directly included in the company’s net profit.
According to statistics, in the first three quarters of the computer application companies, there were 42 companies with a revenue growth rate of less than 30% in the first three quarters. In the first three quarters of this year, China’s software industry revenue increased 31.7% year-on-year. At the same time, the gross profit margin of the software industry ended in three consecutive quarters of rising in the third quarter, showing a slight decline.
Analysts pointed out that traditional software industry leading companies mostly rely on software outsourcing, information system integration services, and embedded system software, and sales of these products have declined after years of rapid growth. In addition, due to the large influence of manpower cost on leading companies, their performance is weak. This person thinks, the traditional software industry also needs to seek new profit growth points, such as information technology consulting services, data processing and operational services, such as subdivided areas, or Internet-based cloud computing services.
Although the policy was favorably released, the performance of most software companies fell to the industry average. In the first three quarters, the revenue growth of the software industry reached 31.7%, while the revenue growth of software-listed companies was only 21.43%. Analysts pointed out that despite policy support, software companies still need to find new growth points in the future.
Although the Ministry of Industry and Information Technology released the “New 18th Document†in the beginning of this year, it explicitly stated that software VAT refunds are due to the fact that the relevant rules of the State Administration of Taxation have not been published. Software companies cannot receive revenue from VAT refunds for the first three quarters of this year. The industry generally appears that "increasing income does not increase profits."
Due to the delay of VAT refund, the growth rate of net profit of software companies in the first three quarters was lower than that of operating income. According to statistics, at present there are 74 computer application companies in the first three quarters of net profit growth rate of 9.48%, while operating income growth rate of 21.43%.
Analysts pointed out that the return of VAT tax revenue is confirmed or concentrated in the fourth quarter, when many companies will reverse their performance in the fourth quarter. Industry insiders expect that in the fourth quarter, the software industry will honor the full value-added tax return, and the overall growth of the industry is expected to increase by 10%.
“The company’s revenue from software products is relatively high.†Analysts believe that the value-added tax (VAT) benefits and future business tax exemption policies mainly benefit software products, while in computer application companies, actual software products account for different proportions. On the contrary, hardware products account for a relatively large amount, and such companies are less stimulated by tax incentives. According to this person, in some provinces, the return of value-added tax is regarded as non-operating income and it is necessary to refinance income tax. In some areas, the value-added tax return part is regarded as a “policy red envelope†that is directly included in the company’s net profit.
According to statistics, in the first three quarters of the computer application companies, there were 42 companies with a revenue growth rate of less than 30% in the first three quarters. In the first three quarters of this year, China’s software industry revenue increased 31.7% year-on-year. At the same time, the gross profit margin of the software industry ended in three consecutive quarters of rising in the third quarter, showing a slight decline.
Analysts pointed out that traditional software industry leading companies mostly rely on software outsourcing, information system integration services, and embedded system software, and sales of these products have declined after years of rapid growth. In addition, due to the large influence of manpower cost on leading companies, their performance is weak. This person thinks, the traditional software industry also needs to seek new profit growth points, such as information technology consulting services, data processing and operational services, such as subdivided areas, or Internet-based cloud computing services.
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