Analysis Of Value-added Tax Reform On Chinese Industrial Structure

Value-added tax reform started from Shanghai to other provinces in China, from transportation and modern services to the whole industries including construction, real estate, financial services and consumer services, which is going to be carried out from May 1,2016. Take the new real estate of all companies into the deduction of VAT range to make sure the tax burden decrease. During the period of China's New Normal, this act aims to decrease the tax burden of the tertiary industry and then develop the tertiary industry to achieve the transformation and upgrading of industrial structure.Based on nearly 210 panel data of 7 years of 30 provinces, the research construct DID model to analyze the effect of value-added tax reform on China's industrial structure. It comes to a conclusion that the pilot of value-added tax reform has the positive effect on industrial structure upgrade. This paper also researches the development of industrial structure and value-added tax reform in Shanghai to analyze the influence and advice which benefit the reform.Along with the valued experience from countries over the world that had successful value-added tax reform, we take Korea as an example. Finally, we find that value-added tax reform is good for the optimization of industrial structure, structure specialization and division. Thus, China can take advantage of this value-added tax reform to realize industry conversion.