Research On The Legal Issue Of The Financial Industry Turning To Levy The VAT In Our Country

From2009, China began to full implementation reform of the transformation ofvalue-added tax. The levied type of the VAT became from the production-oriented to theconsumption-type. With the advance of the VAT reform, expansion the area of value-addedtax is growing increasingly warm. This is mainly because our current system of turnovertax implements a parallel mode with sales tax and value-added tax: levying the sales tax toprovide labor services, levying the value-added tax to sales of goods. This makes a lot ofservice industry, such as financial servieces, transportation, construction etc, are excludedfrom the area of the VAT. And because of the characterisitcs of the service industry and thesales tax, collection of sales tax on service industry makes the VAT deduction chainfracture occurred resulting the double taxation, and takes a greater tax burden to theservice industry.As the third sector, the service industry occupies an increasingly important position inChinese economic development, plays an important role in stimulating domestic demandand promoting economic growth. In many trades of service industry, the financial sectorundoubtedly occupies a crucial position. At present because of collecting sales tax to thefinancial industry, in fact, the financial sector bears the burden of double taxation of thesales tax and value-added tax. High tax burden is not conductive to the healthydevelopment of the financial sector. In this sense, the financial industry turns to levy theVAT with the urgency of reform. At the same time, from a legislative point of view,theEleventh Standing Committee of the National People’s Congress decided to developvalue-added tax of one-way tax included in the legislative plan of the Standing Committee.In practice, in2012, Shanghai took the lead pilot the transfer levy the value-added tax inthe financial industry, visible from either legislation or practice, financial industry turningto levy the VAT haves the urgency of the reform.Just under this background, the author is to study how to levy the VAT in financial industry legally and reasonably. In the view of the law, the author will analyse thenecessity and the problems which we must face on turning to levy the VAT in financialindustry. And then on the basis of drawing on international levy mode, combined withChina’s actual VAT law legislation as an opportunity, the author will propose thelegislative propositions on levying the VAT in the financial industry. The first part of thispaper analyzes the status quo and the abuses of levying the sales tax in the financialindustry, demonstrates that levying the value-added tax in the financial idustry is in linewith the basic principles of tax law. The second part of the combination of the financialindustry, analyzes the problems faced by the value-added tax. The third part hascomparative analysis international different collection mode, and how to use theexperience of the other countries for reference. In the end, the paper propose the legalpropositon on levying the VAT in financial industry in our country, and how to improvethe system of levying the VAT in financial industry.