The Effect Of Levying VAT Instead Of Business Tax On Corporate Performance Of Listed Companies

As the carrying out of the reform and opening policies and the transition from planned economy to market economy, our country’s tax system is always based on the needs of the economic system reform in our country. From the implement of value added tax (VAT) in some cities in1979to the tax reform in1994, and then to the transformation-oriented reform of VAT in2009, all these tax reforms played an important role of economic development. Nowadays, the complex economic environment has put forward new requirements for our tax system. In March2011, our "12th five-year plan" put forward to "enlarge the range of levying VAT and narrow the range of levying business tax". From January1st2012, our country first carried on the pilot practice of levying VAT instead of business tax in transportation industry and part of the modern service industry in Shanghai. From August1st2012to the end of2012, the range of the pilot practice has expanded to Beijing, Tianjin, Jiangsu province, Zhejiang province, Anhui province, Fujian province, Hubei province and Guangdong province. The pilot practice of levying VAT instead of business tax in transportation industry and part of the modern service industry has been carried out in the whole country by August1st2013.Tax’s influences on corporate performance are sensitive and critical. Once levying VAT instead of business tax, the change that influence corporate performance cannot be ignored. As transportation industry was the first industry that became the pilot industry of levying VAT instead of business tax, and transportation industry has become the premise condition of other industries’operation and development. In addition, transportation industry itself has the characteristics of having significant fixed assets. Enlarging the range of levying VAT is beneficial to the current situations of double taxation and accumulates valuable experience for improving VAT reform. So taking transportation industry as a breakthrough point, we use the data of listed companies in our country, discuss the influence of levying VAT instead of business tax on transportation industry and provide basis for expanding pilot areas, adjusting tax rate and optimizing corporate performance of transportation companies.The methods adopted by the paper are theoretical analysis and demonstration. After reading a large number of related literatures at home and abroad, referencing valuable theory and method of demonstration, all these have laid a solid foundation for the research of the paper. Firstly, this paper discusses the theoretical influence of levying VAT instead of business tax from the aspects of operating results, solvency measures, management measures and profitability measures. And then the method of demonstration is used to carry on the research. Taking the listed companies of transportation industry in Shanghai as an example, the method of vertical analysis is used to contrast the corporate performance2years (2010and2011) before levying VAT instead of business tax with the corporate performance2years (2012and2013) after levying VAT instead of business tax. And then the method of horizontal analysis is used to contrast the corporate performance in pilot areas with the corporate performance in non-pilot areas. Finally, this paper puts forward the suggestions according to the conclusions, limitations and research trend in the future.The conclusion of this paper is that, there is a significant negative correlation relationship between levying VAT instead of business tax and corporate performance of listed companies in transportation industry. That is levying VAT instead of business tax isn’t beneficial to the corporate performance of transportation companies, and even makes it worse. In addition, the influence of levying VAT instead of business tax on the corporate performance even more significant next year than this year.The innovations of this paper are using the data of listed companies in transportation industry and the methods of vertical analysis and horizontal analysis to conduct multiple regression analysis. The conclusion of multiple regression analysis is more reliable and persuasive than theoretical analysis. However, as the time is limited since levying VAT instead of business tax, the sample size is small. That may cause the results of study is not accurate and persuasive enough. In addition, there are also limitations in the selection of variables and the design of model, and deficiencies in the depth and breadth of the research.