Study On Problems Of China Value Added Tax Accounting

Value Added Tax (VAT) has already become dominant in China’s tax system. Therefore,whether VAT accounting treatment is correct or not has very important influences on ourcountry, enterprises, investors, creditors and so on. However, due to the bias of VAT theoryresearch and the defects of China current VAT accounting pattern, China’s VAT accountingtreatment and information presentation exist more problems. For example, the inventoryvaluation of VAT general taxpayers violates the historical cost principle; the recognition ofoutput VAT and input VAT disagrees with the matching principle of financial accounting; theprovision of presenting a VAT invoice to deduct the input VAT makes inventory valuation ofVAT taxpayers not comparable; the information presentation of VAT accounting does notcomply with the requirements of importance and clarity, etc. These problems cause that thefinancial reports provided by VAT taxpayers can’t objectively and truly reflect the enterprise’svalue added tax information, resulting in a serious decline of accounting information quality,which is not conducive to making the right decisions for investors, creditors and other users offinancial reports. And it also doesn’t meet the objectives of financial accounting. Therefore,how to standardize China’s VAT accounting treatment and information presentation and howto improve the quality of accounting information have become the problems facing thedevelopment of VAT accounting. And these problems need to be resolved as soon as possible.Using the normative research methods mainly, this paper makes an overall and in-depthstudy on the theories, specific accounting treatment and information presentation of the VATaccounting. Firstly, this paper analyzes the relevant theories of the VAT accounting such as theconcept of VAT accounting, the VAT accounting objectives and the VAT accounting patternsto lay a solid theoretical foundation for analyzing the problems existed in the VAT accountingtreatment and putting forward the corresponding countermeasures. Secondly, the authordeeply discusses the problems of the VAT accounting treatment from two aspects: therecognition and measurement of the VAT accounting and the information quality of the VATaccounting. And these problems become the foothold of this study. Thirdly, analyze thereasons as to the problems. In this paper, the author thinks that the main reasons for theproblems of China’s VAT accounting treatment are the bias of VAT theory research and the defects of the current VAT accounting pattern. Finally, on the basis of analyzing reasons, someadvices and countermeasures which will be used to complete China’s VAT accountingtreatment have been put forward from two aspects which are the specific practice and theconstruction of accounting system. This is the ultimate goal of this paper.The author thinks that China should make good efforts to resolve the problems of VATaccounting treatment from two aspects. On the one hand, China should build a new pattern of"finance and taxation separation" which is based on the VAT expenses-treatment. On the otherhand, China should formulate the specialized VAT accounting standard which is named"Enterprise Accounting Standards No. xx--Value Added Tax" so as to standardize the VATaccounting treatment and information presentation according to "finance and taxationseparation" pattern.