A Study On The Corporate Performance And Tax Burden Impact Of The Tax Restructuring In The Transportation

Over the past decade China has been committed to improve the VAT (value-added tax) system. From the production-based VAT in 1994 to the consumption-based VAT in 2009, the VAT tax system in China has been greatly improved. But a complete VAT system not only covers comprehensive scope of deduction, but also comprehensive scope of the taxation including all aspects of the production, circulation and consumption. So the VAT policy can eliminate double taxation greatly. During the consumption-based VAT reform, the expansion of the VAT has been carrying around the reform. From the introduction of VAT in the 1980s to the VAT reform completed in 2009, our government probably conducted two rounds of expansion of the VAT: first, from 1983 to 1984, the scope of VAT from the machine machinery, agricultural machinery and other individual products had expanded to 12 products, and in around during 1986 to 1989 the expansion lasted; second, in 1994, the scope expanded to all production, sales of goods and cargo processing in the repair and replacement services. On October 18, 2010 17th central committee of the communist party of China in the fifth plenary meeting passed the \" the proposal about establishing the national economic and social development 12 five year plan \". We know from the proposal that our government should "expand scope of the VAT; correspondingly reduce the business tax, in order to speed up the reform of the fiscal and taxation systems. In August this year Shanghai is determined to be the pilot city of broadening VAT tax range to carry out the tax cuts in transportation industry by replacing the business tax with the VAT. It shows that the VAT reform has been expanding around the agenda, and transportation industry has been one of the first pilot industries.The VAT of foreign studies are generally focus on the discussion of the macroscopic level, such as different tax rates to the national economy and social welfare influence, the VAT tax efficiency, etc. At present domestic scholars to VAT research focused on general consumption-based value-added tax reform. Domestic scholars rarely study the VAT expansion reform, or are just analyzing the necessity and feasibility of the expansion in the theoretical level. This article selects the transportation industry --the non-VAT taxable industry as the research objects. It focused on the transport enterprise performance of the tax restructuring, and describes more comprehensively about socio-economic issues caused by the scope of the current VAT and the tax status of foreign transportation. By comparing the difference scope of the VAT in China and in foreign countries, we know the necessity of implementing the VAT in the transportation. The article also describes the necessity and feasibility of the tax restructuring in the transportation. It systematically analyses the changes in the enterprise financial data when the takes the VAT.This article is structured as follows: firstly we analyze the necessity and feasibility of the transportation tax restructuring so that we can find our government need to implement VAT in the transportation. Then we take the enterprise performance and tax burden as a starting point to theoretically analyze the impact in the transportation corporate performance and tax burden after taking the tax restructuring; in the empirical part of the article, we based on the historical financial data of the Shanghai and Shenzhen-listed Transportation Company to estimate the corporate financial performance and tax burden at 17% and 13% VAT rate. Then with the analysis of the forecast data we can find that the corporate financial performance is worse and the tax burden is heavier after the tax restructuring. We also can find that the corporate financial performance under the lower tax rate is better than under the higher and the tax burden under the lower tax rate is lighter than under the higher after the tax restructuring. So the government should give the transportation some tax incentives and a lower value-added tax rate to protect interests of the corporate.