The Impacts And Countermeasures On Financial Management On The Construction Industry While Replacing Business Tax With Value-added Tax (VAT)

Premier Li Keqiang published a signed article on the "truth" magazine in May2014 and pointed out that there are five steps for replacing business tax to value-added tax.First,expand the scope of performing value-added tax policy in 2014;Second,realize the basic coverage of value-added tax policy by 2015;Third,further perfect the value-added tax system;Fourth,perfect the value-added tax distribution system both on central and local areas;Fifth,enforce the legislation of value-added tax.The construction industry is a pillar industry in the national economy.The implementation of "replacing business tax with value-added tax(VAT)policy on construction industry can reduce the tax cost,release the bonus from reform,perfect tax system,eliminate the multiple taxation,promote the restructuring of economy and the convergence of industries.In order to internationalize enterprise management and make growth of the construction enterprises,relevant departments and staffs should be fully prepared for adopting "replacing business tax with value-added tax(VAT)"policies.But the adoption of "replacing business tax with value-added tax(VAT)"policy will also bring negative influences to the short-term financial management on construction enterprises.These include cash flow pressures,lower profits,corporate tax increase etc..If no appropriate solution is found,"replacing business tax with value-added tax(VAT)" on the construction industry will not run smoothly and it will also increase the risk of enterprise management.This paper will find countermeasures to solve this problem by studying and analyzing the impact of carrying out the"replacing business tax with value-added tax(VAT)" on the construction industry.By combining the method of theoretical research and case analysis,this paper elaborated the impact and countermeasures on financial management after adopting "replacing business tax with the value added tax" on construction enterprises.This article is divided into four parts.The first part is to illustrate the imperativeness and the subversive meanings of adopting "replacing business tax with value-added tax(VAT)" policy from the perspective of the background and meanings of it on construction industry.The second part is to illustrate the basic principles of the value added tax and the corresponding legal responsibility.The third part is trying to elaborate the influence on financial management theoretically after adopting "replacing business tax with the value added tax" policy on the construction industry,and analyze the financial part such as the labor cost,material cost,concrete cost.After that we discusses the countermeasures to limit the impact of "replacing business tax with value-added tax(VAT)" on the construction industry.This part acts closely with the content of the “ impact part” mentioned previously.After the theory part,the analyzes is around the case of "replacing business tax with value-added tax(VAT)" practices on CJ construction enterprise which I worked in,and compares the daily operations between adopting business tax and value-added tax policies to lead the transition from theories to practices;The fourth part reaches a conclusion and raises proposals on the impacts and countermeasures of adopting "replacing business taxwith value-added tax(VAT)" policy on financial management on construction industries.