Research On BT To VAT Reform In China’s Banking Industry

The banking sector has played a very important role in the process of China’s economic development, China’s banking sector now implement the business tax system, there are many problems with it, for example, it leads to double taxation, heavier tax burden and it damages the VAT chain. It’s also not good for the export of China’s banking services, etc. These problems hindered the sustained development of China’s banking industry. In order to enhance the competitive strength of China’s banking industry, continue to maintain the development of China’s economic, tax reform must be carried out in China’s banking industry.In2011, the Ministry of Finance and State Administration of Taxation issued a program about changing the business tax into VAT, This issue made the prelude of goods and services tax reform in China. In the beginning of2012, Shanghai First implemented the goods and services tax reform. Since August lth of2012, the goods and services tax reform gradually expanded to10provinces and municipalities including Beijing, Tianjin, Jiangsu. Zhejiang, Anhui, Fujian, Hubei, Guangdong Xiamen and Shenzhen. This tax reform about business tax changing into VAT will gain valuable experience for the goods and services tax reform.It can be predicted that with the continuation of the reform, China’s banking industry will be included in the scope of this reform about changing the business tax into VAT. This reform can effectively solve the problems of the business tax system. It can also promote the economic development of our society. Therefore, with the expansion of the business tax changing into VAT in Shanghai, Beijing and other regions, the VAT system reform of China’s banking industry is of great strategic significance, the VAT tax reform in banking industry is bound to be the trend of China’s tax system.The research methods of this article are as follows:①International comparison method, this method is used to introduce and contrast three international banking VAT models. It’s also used to analysis the advantages and disadvantages of the three international banking VAT models.②qualitative analysis method and empirical analysis method, these methods are mainly used in the implementation of the VAT reform of China’s banking industry design and empirical analysis. By using the qualitative analysis, the author designed three programs about China’s banking industry VAT reform. And the empirical analysis method is used to analysis the reducing of tax burden of China’s banking industry.③The combination of descriptive and exploratory research methods, this method is used in every chapter of this article.By studying China’s current business tax changing into VAT reform, learn from the international practical experience, combined with China’s specific conditions, from three different angles, this paper presents three kinds of tax rates and tax reform methods, which is the innovation of this paper. The first tax rate design is based on the reform program of business tax changing into VAT’s basic principles, the second tax rate is designed for maintain the government revenue in China. The third design conforms the principle of tax neutrality of the VAT. Learning from the tax rate of the modern service industry used in the current VAT reform. The article analyzed the difficulties in China’s banking industry VAT tax reform. It also gives some countermeasures and suggestions to overcome these difficulties.In the design of the banking industry’s VAT reform, the author proposed three different designs, but the factors to be considered in the tax rate design is not comprehensive enough, and the identification of the tax basis of China’s banking industry is still not specific enough,, which will inevitably lead to be objective enough. As the reform being deeply discussed, the VAT tax rate, the tax base and the amount of input tax deduction will continue to conduct further research and discussion.This article mainly research China’s banking industry VAT reform program design as well as the difficulty of reform and corresponding countermeasures and suggestions, the article is divided into five chapters:The first chapter is the introduction chapter. This chapter is mainly on the background, purpose, and significance of the research, the current research at home and abroad, the ideas and methods of this research, the innovation of this paper and inadequacies.The second chapter expounds the problems of China’s banking industry’s business tax system, it also expounds the need for the implementation of the VAT reform.The third chapter introduces three international banking VAT models:the EU model, the Australia-Singapore model and the Canada-New Zealand model, this chapter also gives some conclusions to the three international banking VAT models.The fourth chapter discusses the banking industry VAT design and the empirical analysis of the implementation of the VAT reform of China’s banking industry. Learning from the practical experience abroad, combined with China’s current national conditions, this chapter show three banking industry VAT reform designs, this chapter also analyzes the ability of these design to reduce the tax burden of China’s banking industry.The fifth chapter analyzes the difficulty of the implementation of the VAT system design of China’s banking industry and gives some suggestions to improve the VAT reform of China’s banking industry.