Impact Research On The Tax Burden Of "Replacing Business Tax With VAT" To H Construction Company

On May 1st,2016,the pilot program of "Replacing Business Tax with ValueAdded Tax(VAT)" was extended to the construction industry,real estate industry,financial industry,life service industry and other industries.Since then,the policy of "Replacing Business Tax with VAT" has been implemented all over the country.It is an important measure to change the mode of economic development and promote the supply-side reform by bringing all industries into the scope of VAT taxation.Due to the wide range and complex economic business in construction industry,much attention has been paid to it’s reform of "Replacing Business Tax with VAT" by government,experts and construction practitioners.The purpose of the tax reform of "Replacing Business Tax with VAT" is to get through the VAT deductible chains,avoid double taxation and achieve structural tax reduction.As a pillar industry of the national economy,the construction industry is more affected by the policy of "Replacing Business Tax with VAT" than other industries.Since the implementation of "Replacing Business Tax with VAT" in the construction industry,government departments have timely introduced transitional preferential policies,adjusted the VAT rate of the construction industry,expanded the deductible scope of the construction industry,and continuously improved the tax system of "Replacing Business Tax with VAT".Domestic experts and construction practitioners mainly analyzed the impact on the tax burden of "Replacing Business Tax with VAT" from the perspective of the national macroeconomic economy and the enterprise level,then came to different conclusions.Therefore,according to the specific construction projects,this paper introduces the research status of turnover tax at home and abroad by documentary research,and explains the policy of "Replacing Business Tax with VAT" which gradually expands to the construction industry is an inevitable choice for China’s tax system being in line with international practice.At the same time,the historical process of "Replacing Business Tax with VAT" in China is straightened out,and the tax burden changes and impacts before and after "Replacing Business Tax with VAT" in the construction industry are compared,which lays a foundation for the development of the paper.Case analysis is used to introduce the current situation and tax payment of H construction company,and questions are raised based on the financial data in the past four years: after the implementation of "Replacing Business Tax with VAT",the turnover tax burden and the total tax burden level of H construction company are relatively higher,and the profit margin is a litter higher than the average level of the local construction industry but it has a large space to improve it’s situation.The comparative analysis method is adopted to analyze the tax burden of each construction stage before and after "Replacing Business Tax with VAT" which is based on the progress analysis of project A.then,By classifying project A into three different types of sub-projects and analyzing their tax burden separately before and after "Replacing Business Tax with VAT".The positive impacts of the "Replacing Business Tax with VAT" to H construction company is summarized which helps the company to strengthen internal management,save monetary fund and pay more attention to supplier management etc.And also the negative impacts of "Replacing Business Tax with VAT" to H construction company is summarized accordingly,for example,the financial management after "Replacing Business Tax with VAT" becomes more complex,the tax-related risks are greater and the total tax burden of the company increases.Through the vertical and horizontal comparison of the tax burden before and after "Replacing Business Tax with VAT" of project A,this paper finds that the turnover tax burden and total tax burden of project A is decreased,which is caused by the interaction and mutual offset among three different types of sub-projects.In order to avoid a general conclusion,this paper analyzes the proportion of different types of subprojects when the tax burden is balanced before and after "Replacing Business Tax with VAT",thus revealing one of the most important factors of increased tax burden for H construction company is due to the higher proportion of civil engineering projects in the total projects.This paper further sum up the specific reasons,for instance,the deductible of VAT for civil engineering projects is insufficient,the proportion of labor costs accounts more in the total cost,the proportion of civil engineering projects accounts more in the total projects too,and the operating management and financial management is far from perfect.According to the reasons analyzed above,many measures should be taken to improve the situation,such as the company should strengthen the management of purchasing goods and materials,improve the level of mechanization,optimize the structure of the projects and promote operating management and financial management level.The study is helpful for H construction company to reduce the tax burden of turnover tax and total tax as well as create more economic benefits,and also has certain referential value for other construction companies in improving management level.