Research On The Tax Burden Decreasing Effect Of "Replacing Business Tax With VAT" In China's Construction Industry

Since the beginning of "6+1" value-added tax reform in Shanghai in 2012, the pilot sectors and the pilot areas of the reform program of replacing business tax with value-added tax (hereinafter referred to as "VAT replacement program") has changed several times. To May 1st,2016, financial industry, construction industry, real estate industry and life service industry will be included into the scope of value-added tax (VAT). Then the VAT replacement program which has last for four years will be completed basically and the business tax will be replaced by the value-added tax all sidedly. To include all industries of national economy within the scope of VAT is a significant act to transform the pattern of economic development, to strengthen structural reform of the supply front. On one hand, "VAT replacement program" completes the VAT deduction chain, reduces tax burden and takes advantage of the neutral VAT. On the other hand, "VAT replacement program" makes labor division more professional and thinner, promotes the integration of the three industries and promotes service outsourcing and separation of major and auxiliary, which is beneficial to promote the optimization of the industrial division, to lengthen industrial chain and to upgrade manufacturing, create conditions for enterprises to innovate technology and to update equipment, beneficial to improve the mode of production and operation, so as to lay foundation for our country's economic structure transformation and upgrading.This time, That construction industry and other three key industries are included into "VAT replacement program" means the consolidation of VAT system and the throughout of deduction chain between services industry and secondary and tertiary industries, which is of great significance to create a fair market competition environment, to achieve steady economic growth and to improve the tax system. The inclusion of construction industry within the scope of VAT can improve continuity of VAT deduction, avoid double taxation but also brings construction industry major opportunities that thinning of division of labor and rising of the level of development.In this master thesis, we study the effect of "VAT replacement program" to tax burden on construction industry, and put forward suggestions to enterprises to face "VAT replacement program" from view of operation strategy and financial management. We improve and perfect the principle of tax burden measuring, making the input-output method combined closer with tax regulations and the practice of "VAT replacement program". We do research from macro and micro aspects, making the angle of view more open. Meantime, the practical significance of this article is outstanding:through analyzing the effect of "VAT replacement program", this thesis puts forward suggestions on promoting "VAT replacement program" in construction industry and provides reference for enterprises and industry to transform the development mode and to upgrade industry.Besides of the introduction, the remainder of the master thesis is as follows. The second chapter elaborates the characteristics of construction industry in our country and the status in quo about tax collection and management in construction industry. In this chapter, we show the status in quo, the characteristics, the business tax regulation before "VAT replacement program" and the new value-added tax regulation after "VAT replacement program". The third chapter analyzes the effect to tax burden on industry of "VAT replacement program" in construction industry. In this chapter, we measure the change of tax burden on construction industry after "VAT replacement program", by using the latest data in input-output table and statistic yearbook of relevant years and combining the general VAT computation principle and the input-output method:under the VAT rate of 11%, the tax burden on construction industry in each year decreases significantly; we also analyze the influence factors of tax burden changes and find that both VAT rates' increasing tax burden effect and intermediate input's reducing tax burden effect determine the change of tax burden on industry. The forth chapter takes CRCC for an example, measures the effect of "VAT replacement program" to tax burden on construction enterprises and finds that it decreases obviously. Finally, the fifth chapter proposes suggestions on perfecting operation and strengthening financial management to assist enterprises facing "VAT replacement program", including adjust pricing mechanism of construction service, accelerate updating of technology and equipment, pay attention to changes in tax treatment under different operations and strengthen VAT accounting and invoice management.