The Impact Of "Business Tax To Value-Added Tax Reform"on The Advertising Design Services Industry And The Countermeasures

"Business Tax to Value-Added Tax (VAT) Reform"(hereinafter referred to as "VAT reform") is another major reform of the tax system to replace business tax with VAT on selected sectors after the implementation of VAT in2009. It is the further development of consumption-based value-added tax reforms. The "VAT reform" aims to eliminate double taxation, improve the tax system, optimize the tax structure, promote the integration of the three industries, encourage economic structural adjustment, and promote industrial upgrading. This VAT reform has had a significant impact on certain sectors such as transportation and services industries. The Advertising sector, as part of the services industry, is included in the scope of VAT reform pilot program. Compared to other types of businesses Included in the pilot program, advertising design services are also involved with issues such as tax attribution changes and the construction fee levied upon cultural undertakings, which compound the impact of business tax changes. Based on this, this paper focuses on advertising sector and studies the tax implications of "VAT reform" and as well as its impact on operating strategies.This paper consists of six chapters. The first chapter, Introduction, from the theoretical perspective, describes the background of current VAT tax reforms and the motivation of this study. It also includes the review of relevant literature, presents the overview of main contents, and discusses the contributions and limitations of this study. The second chapter outlines the policy background, discusses the meaning and significance of "VAT reform", and describes the reform process and main elements of the reform. It also analyzes the current status of VAT reform pilot programs in some regions. The third chapter briefly describes the distinctive characteristics of advertising design service companies and why this sector is selected in this study. Additionally, using a case study approach, this section presents an overview of XSY Culture Media Co.’s operations. Chapter IV discusses the tax impact of "VAT reform" on advertising design services industry, using recent industry data. Combining tax theory and case study approach, based on research of XSY Culture Media Co. Ltd., corporate tax planning strategies are presented. Chapter V discusses the implications of "VAT reform" on business strategies for advertising design companies and proposes countermeasures in response to such tax changes, from both a theoretical point of view and case study perspective. Chapter Ⅵ summarizes the findings, discusses limitations of this study, and proposes future research directions. There are three main contributions of this paper. First, focusing on a distinctive industry of the service sector, advertising design services, this paper analyzes the impact of recent value added tax reform and discusses the implications of such changes on corporate tax planning and business strategy. Second, combining tax theory with case study approach, I conduct an in-depth analysis to examine the impact of "VAT reform" on advertising design services companies. Third, I propose effective tax planning and business strategy advertising services industry can employ to succeed in a period of tax changes.