Vat Pilot Study

Along with the country's economic development. Since the start of production-based value-added tax in 1994, it has exposed many contradictions and problems in investment in fixed unfair competition with foreign-funded enterprises and has played a negative role in the transformation. In northeast China, many capital-intensive industrial enterprises are in urgent need of investment funds. To support the development of the old industrial bases in northeast China, our country has accumulated experience in the implementation of value-added tax restructure, the State Administration of Taxation and The Ministry determined that the northeast provinces take the lead in VAT restructure from July 1, 2004.From the beginning, the period has been more than two years. Practice has proved that the pilot sectors for investment in the transformation of, the elimination of double taxation to certain extent, the pilot is conducive to enterprise development. The consumption type VAT would also reduce tax revenue for the experimental areas, but it is much less than the amount of reduction of the expected level. This paper analyzes the impact of the transformation of value-added tax on employment. Value-added tax restructure will reduce the number of employment-intensive enterprises to promote employment pressure. Overall, the pilot project to change the value added tax for investment and economic development in the three provinces in northeast China has provided a great impetus, to support of existing enterprises in the development of private investment and in the northeast region of "depression effects". Mobile capital of non-pilot areas has been attracted to the northeast region; the growth of investment in the three northeastern provinces is higher than the national average level. However, some problems have emerged in the course of trial. In the early stages of transition, out of consideration to reduce the financial pressure on receipts tax reduction, we take incremental policy, and no increase in the value-added tax on many enterprises can not enjoy preferential treatment as a result of the restrictions. Due to tax authorities and enterprises to define standards for the production of fixed assets is not unified, the process has increased the workload. It has also created an impact on other revenue management. As the experimental areas outside the capital gains tax by restructuring policy to attract funds flow to the northeast, it interferes with the normal flow of funds against the capital gains tax neutral policy. Moreover, only eight experimental areas to implement value-added industries in transaction. Some enterprises can use unsuitable operations in different regions; between related enterprises to escape taxation. VAT offset to the enjoyment of the policy increase the level of difficulty in the management of the collection of value added tax. Moreover, the lack of the necessary restructure of the VAT measures, the lack of standardized policies and regulations pilot feasibility is not high. These entire facts expose more difficult to change the value added tax. However, the overall situation is satisfactory experimental project to change the value added tax. Under a restriction of the problems for the promotion of accumulated experience, as part of the overall tax reform, transformation of value-added tax across the country is inevitable. China's land area, the regional economic development are not unified, a big gap between the level of investment, taking into account various factors, weighing the pros and the results of the Northeast region, following the success of the experiment, the next step in the implementation of the transformation of value-added tax. The northeast region should be modeled on the experimental project to continue sub-regional, sub-sectors, and continue the incremental method. The economic development of the central region and the northeast region are similar, with large capital-intensive corporates. The general level of economic development is not high, in urgent need of financial support. Therefore, the next step in the transformation of value-added tax on a trial basis should be chosen for the central region, but the pilot should not be too long. Concerning experimental projects in the central region, we can learn from the reform experience from the northeast region. In the light of the problems of northeast, early measures should be taken to improve revenue collection, strength the management of the VAT invoices, and reduce tax costs and the cost of paying taxes, reform of the central fiscal revenue and expenditure structure. In particular, city and county pressure caused by the financial pressures should be reduced. VAT is a successful transformation of an important component of China's tax reform, which will affect the entire economic body. The process of transformation and transition of value-added tax, other tax reform must follow-up. The corporate income tax reform being the top priority, the two taxes merger has been put on the agenda. In order to reduce the pressure of reformation, VAT tax restriction should be taken with corporate income tax reform.