Impact Of VAT Reform On Corporate Investment Behavior

Since the reform of tax distribution system in 1994,value-added tax has been the largest tax in China.The previous reforms of VAT have a very significant impact on the national economy.Author focuses on the impact of previous VAT reforms on corporate investment.Through the establishment of theoretical models and empirical models for analysis,conclusions with reference value and practical significance are finally reached.This article selects three reform processes for research,VAT transformation,Business Tax Replaced By VAT and tax reductions.Get the suppose in the theoretical model and prove it in later empirical model.In the theoretical model.The article sets the objective function according to the purpose of maximizing the profit of the enterprise,and constructs the constraints of the company's capital.Establish a DID model because that the value-added tax transition and Business Tax Replaced By VAT sets in some areas first.But the policy carries out together in the case of tax reduction,so a two-way fixed effect model is established.The results show that:(1)Both the transformation of VAT and Business Tax Replaced By VAT have promoted corporate investment.The tax reduction policy has no obvious impact on corporate investment.(2)The effect of VAT transformation and Business Tax Replaced By VAT on investment promotion of state-owned enterprises is not as good as that of non-state-owned enterprises.(3)The effect of VAT transformation and Business Tax Replaced By VAT on investment promotion of large enterprises is not as effective as that of small enterprises.From the analysis results,both VAT transformation and Business Tax Replaced By VAT reflect the policy aim reducing the investment cost of the enterprise and guiding the transformation promoting the investment of the enterprise.The tax reduction which is subjected to decreasing tax rate does not improve enterprises investment.