An Analysis On The Impact Of Business Tax To VAT On The Tax Burden And The Financial Performance Of The Construction Industry

The day,May 1,2016,has witnessed a profound revolution in the financial system of China that the construction industry was embraced by the change from Business Tax to Value-Added Tax.All of these require the construction industry to make a transformation for adapting the changes of the current economic environment,and lay a solid foundation for the internationalization and future development.Besides,the prevention of double taxation and the reduction of the tax burden are the original intentions of the policy of “Business Tax to VAT”.As a result,the following two questions,whether the construction corporation realizes its goal of tax reduction,and what the impact of business Tax to VAT on the tax burden and the financial performance is,are worth further analysis and discussion.Therefore,it is particularly necessary to deeply analyze the impact of the policy of “Business Tax to VAT”on tax burden and financial performance of the construction industry with specific construction enterprises as an example.By taking TD Construction as an example and analyzing the impact of “Business Tax to VAT” on tax burden and financial performance of the construction industry,this thesis aimed to discuss some feasible suggestions for construction enterprises to cope with the policy of“Business Tax to VAT”.Firstly,based on the case studies of TD Construction,the author analyzed the operating status and the changes of tax burden before and after the revolution,finding that the actual tax burden has increased after the revolution.Then,the author analyzed the financial performance of TD Construction,discovering that a positive influence of the financial performance was made by the implement of the policy of “Business Tax to VAT”with a decline of operation capacity.Finally,some suggestions on tax burden and financial performance of construction enterprises are put forward.Suggestions on reducing tax burden are put forward from three aspects of policy,collection management and enterprises: At the policy level,it is proposed to continue to reduce tax rate and increase the numbers and scope of input tax deduction;At the level of collection management,it is proposed to speed up the revision of tax administration law and strengthen invoice supervision;At the enterprise level,it is proposed to select the supplier with pertinence,pay more attention to the legal deduction certificate of value-added tax,increase the enterprise equipment upgrading efforts,reducelabor costs as far as possible,and standardize the implementation of “Employer Supplied Items ”.Based on my analysis,I recommend specific steps for corporations ' financial performance: strictly control enterprise cost,strengthen accounts receivable management and cash use efficiency,optimize enterprise organization and internal control,improve accounting system and personnel construction.Although the policy of “Business Tax to VAT” may encounter many difficulties,even tax increase,in the early stages of reform in construction corporations,the implement this policy will paly a positive role in promoting the upgrading and development of the industrial structure and the steady and sound development of the national economy in the long run.This thesis is expected to be helpful for construction enterprises to actively respond to the change from Business Tax to Value-Added Tax and achieve substantial tax reduction through the above research.