A Study On The Tax Compliance Cost Of Enterprises Under The Background Of Bussiness Tax To VAT Reform

As an important part of Chinese Tax system reform,replacing the Business Tax with VAT,has produced significant effects on every field of China.Hence,performance evaluation,for instance,variation in tax burden and company profits,is becoming more and more popular.It has been argued that,as a whole,this policy brings about positive effects on structure adjustment and burden relief.However,little attention has been giving to the micro policy implementation.Tax compliance theory studies why people pay tax and how to better the process,thus providing a different view on policy assessment and improvement.It has been proved that VAT compliance costs more money and takes more time because of its complexed systems and procedures,which,perhaps,produces higher tax compliance costs and heavier tax losses.But,under the background of VAT reform,there are few researches related.Based on tax compliance theory and BT to VAT reform,a unique perspective of policy evaluation,this paper aims to find out changes of company tax compliance costs and its underlying reasons.Above all,it introduces how and why Chinese goverment replaces BT with VAT,and then,research assumptions are proposed depending on theory-based analysis of tax compliance costs,it is assumed that tax compliance costs are influenced by four factors,policy setting,features of taxpayers,administrative service and taxation law enviroment.And in the next part,this paper uses questionnaire survey and data analysis to examine and correct its assumptions by reflecting changes of tax compliance costs.Finally,This paper proposes suggestions from both the standing of companies and governments.Main methods used in this paper includes text analysis,interview and questionnaire survey.Data are analyzed by Chi-Square Test and analysis of means,in which the costs of company tax compliance was defined as a dependent variable,and independent variables included tax system,features of company taxpayers,taxation law environment and administrative service.The results show that,because of the BT to VAT reform,on the one hand,taxpayers are supposed to spend more time because their interactions with tax authorities become more complexed when they go post-filling and invoice management;on the other hand,short-term profits from the reform,are not as obvious as expected and most companies believe that their tax burden keeps the same as before.Analysis also suggests that tax compliance costs can be influenced by such factors as tax system,features of taxpayers,taxation law environment and administrative services.To be brief,tax compliance costs of modern sevice companies,small-sized firms and enterpises with complexed tax types tend to be higher.In addition,the more complexed the tax system is,the higher the tax compliance costs are.However,the strictness of taxation law environment,was negatively related to the costs of tax payment.It is also believed that low compliance costs depend on the concerted efforts of companies and tax authorities,for companies,it is highly recommended to keep a positive attitude,to prepare in advance for tax planning and tax affairs management,and especially,to keep their fingers on the pulse of the current policies;for tax authorities and other goverrment departments,it is necessary to put their feet into companies’ shoes,for example,bettering policy setting,administrative service as well as risk management and control,thus removing obstacles to tax compliance.