Research On Impact To Hefei Tax Economy With The Replacement Pilot Of Business Tax By Value-added Tax

China’s economic structure is currently undergoing transformation due to resource,environmental,and demographic factors.One key step in further of economic transformation is to significantly develop transportation services and modern service industries,which is remarkable of the relevant policies in recent years, and tax policy is undoubtedly one of the greatest measures to the enterprise In China’s current tax system structure, value added tax and the business tax are the most important two tax categories of taxes, which orpeate independently.Among them, the value-added tax range covers the second industries apart from construction industry, most of the tertiary industries levy business tax.At present the phenomenon of repeated taxation exists when industries levied the business tax need to purchase assets, goods,repair services and replacement services in the process of production and operation, because they cannot deduct value-added tax amount. It is not good to related industries, because this method increase the tax burden of taxpayers,while taxpayers need pay tax full of the business volume with deduction of services purchased.As such,economic transformation calls for replacement of business tax by value-added tax in certain areas.On October26,2011,the State Council decided to expand the application of value-added tax to selected geographic areas and services through a pilot program.First,the pilot program would only cover transportation services and some other unspecified modern service industries in Shanghai.It is intended that the pilot program would be expanded to selected service industries nationwide based on the trial experience.Second,the pilot program allows for two more value-added tax rates at6%and11%respectively beyond current13%and17%rates.Third,the value-added tax revenues collected in the pilot program would be exclusively allocated to the local government in Shanghai as a replacement of lost business tax revenue,without splitting with the central government.To the extent that these covered services in the pilot program previously enjoyed some business tax benefits,corresponding adjustments would be made to the applicable value-added tax going forward.The amount of value-added tax paid by the covered services would be allowed as input credit.With the view of the entire social industries,it can improve the VAT chain and eliminate the phenomenon of repeated taxation, thereby reduce tax burden of the social reproduction with replacement of business tax by value-added tax.The decline in tax will reduce business costs, the price and inflation pressure. A comprehensive collection of value-added tax and abolition of the tax, will reduce the tertiary industry tax burden pressure, promote benign development of the tertiary industry. Objectively it is a good opportunity to change the current big and complete, small and complete business model for traditional state-owned enterprises while enterprises can realize the separation of main and auxiliary industries and go to the battle-front without any burden and producer services will be stronger with the environment of tax system reform. At the same time, the tertiary industry labor exports can enjoy VAT export tax rebate,so that our labor products can stand at the same level with the European Union and other countries in the tax, which obviously enhance our international competitiveness of the tertiary industry. But the reduction of enterprise tax burden means that the reduction of government’s tax revenue.If the pilot expand nationwidely,there will be great pressure to our country finance with decrease of tax revenue more than one hundred billion.At the same time,after the pilot,the business tax will merge into the national tax system,which is bound to put forward new requirements to the division system of he central and local property rights.At present, the pilot has carried out in several provinces,its influence to enterprises,collection agencies as well as the problems in the pilot also gradually appear. With an example of Hefei City of Anhui Province This thesis analyzes the influences on tax economy of Hefei City around the pilot, and put forward some suggestions and measures to launch the pilot smoothly and make arrangements after the pilot.