Research Into The Tax Effect Of Transformation From Business Tax To Value Added Tax In The Real Estate Industry

On January 1,2012,Shanghai took the lead carrying on the reform from BT to VAT in service industry,which opened the prelude of the reform from BT to VAT in China.On August 1,2013,transportation industry and parts of the modern service industry piloted the reform from BT to VAT on a national scale,at the same time with the trial area expanded,the production,running and distribution of radio,film and television works have already offering into the scope of the pilot.On January 1,2014,the reform have constantly expanded the scope of the pilot to transportation industry and postal services industry.On June 1,2014,the telecommunications industry have offering into the scope of the pilot,too.Up to present,there are the construction industry,the real estate industry and the financial sector having not yet achieved the reform from BT to VAT.General trend indicates that the real estate industry will achieve the reform in the near future.On March 5,2016,at the opening ceremony of the Fourth Session of the 12 th National People's Congress,the premier of the State Council Li Keqiang,who made the government work report,announced that the real estate industry,construction industry,financial sector and consumer services industry will carry on the reform from BT to VAT at the same time.It is of significant significance to predicate the reform policy of the real estate and calculate the financial figures on the basis of the expected policy,not only for the background of the reform policies,but also for the reason that the real estate industry as a pillar industry of the national economy.According to the related policies of the transportation industry,postal services industry and other industries which have the comprehensive implementation of the reform from BT to VAT,make reasonable expectations for the reform policy and formulate the policy which will be applied to the real estate industry.Firstly,we make simulating calculation for the financialfigures of Poly Real Estate.The result shows that applicable value-added tax rate is 11%,operating income and operating cost are decreased in different degree,but at value-added tax rate 11%,tax burden is obviously reduced,and the profit will rise,when taking land cost deduction into consideration.Secondly,when the scope of simulating calculation expand from Poly Real Estate to the scope of the all industry,the results also verify the same regular pattern.What's more,when value-added tax rate is 11%,the more cost deductible ratio is,the more tax decrease,the greater the profit increase.With the regression analysis between the variation of the turnover tax and the variation of the net profit during the time before and after the reform from BT to VAT,it proves out that the variation of the turnover tax has a significant impact on the variation of the net profit.In particular,tax effect is most obvious when value-added tax rate is 11%.The study provides us with more sustain for making policy.Finally,put forward practical proposals according to the results of the simulation of the real estate industry.