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The Implementation Of The VAT Reform Of China's Financial Industry To Explore Design

Posted on:2014-09-01Degree:MasterType:Thesis
Country:ChinaCandidate:M Q ZhengFull Text:PDF
GTID:2269330401958156Subject:Technical Economics and Management
Abstract/Summary:PDF Full Text Request
After11provinces and cities promoted a vigorous tax reform which named Business Tax shifting to VAT on transportation and some service industries, VAT tax reform in China had begun. As a special service industry, the position of financial industry should not be overlooked in the national economy. Different from the tax reform of transportation, the financial industry shifting to VAT has three problems. In the first place, the financial industry has a variety of business, so the tax base of the financial industry is hard to define. The second, the management of government will be unable to keep pace with the rapid development of the financial industry and financial derivatives. The last, most other countries which implements VAT on financial industry adopt free-tax or light-tax policies. The theme of this paper is how to design a VAT tax system which is geared to international standard and suitable for Chinese condition.VAT tax system in China was born in1979and has a history of only34years, so VAT tax system is not mature, not only on paper but also in practice. This paper learns from the successful experience of foreign countries implementation of VAT, also summaries the West Optimal Tax Theory, and emphasizes that our country should adopt a Chinese style VAT system, and laysa theoretical foundation for the later financial industry VAT tax system design.Before designing the VAT system of the financial industry, I points out the drawbacks of implementing the business tax system on the financial industry. After making sure the feasibility of implementing VAT system on the financial industry, I begin to design the structure of VAT system of the financial industry, which focus on definition of tax base and tax rate, and calls on the urgency of tax reform, then analyses the VAT revenue attribution and collection and management problems. On the tax base issue, I learn from excellent cases of foreign countries, which is, VAT bases on service added value. In2010, the scholar, Moru Young proposed a calculation method to compare tax bearing between business tax and VAT. This paper collects data samples of the financial companies in China’s A-share market from public annual reports, and use the calculation method which Moru Young has used and concludes that China should use the rate of13%on the financial industry after data adjustment,I suggest that our country should adopt VAT system on the financial industry. The first step is to follow the EU VAT system, which is charging a VAT rate of13%on the direct financial services, using a tax free policy on the indirect financial services without deduction of input tax, and charging a zero rate on the export-y ones. The implementation process is like the process of tax reform of transportation, first implements pilot project then really gets rolling. The second step is to fully levy VAT on the financial industry and to charge different rate on different business with the deduction of input tax.
Keywords/Search Tags:Financial industry, VAT, Tax system design, Tax systemreform
PDF Full Text Request
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