Analysis Of VAT System In Coal Industry And Suggestions For Improvement

The path of VAT reform in China has shown Chinese characteristics of "from pilot to extension,from part to whole,from general to special".From a subjective point of view,the understanding of the intrinsic mechanism and inherent laws of VAT has not been achieved overnight,and from an objective point of view,the social supporting conditions on which the effective implementation of VAT depends have also undergone a process of development and change.As coal companies use natural resources as their 'raw materials',the coal industry has not enjoyed the benefits of the reform in terms of reduced taxes and costs,but has instead seen its tax burden rise against the backdrop of falling profit levels,as the scope of VAT deductions has expanded and VAT rates have continued to fall.It is therefore important to examine the cost structure and tax burden changes in the coal industry,so that the coal industry can enjoy the'national treatment' it deserves,and to design a VAT system for the coal industry that is in line with the national VAT reform.The paper compares the relevant VAT indicators for the coal industry with the industrial average and reveals that the actual VAT burden on the coal industry is significantly higher than that of the average industrial enterprise under the current VAT regime.The paper calculates the effective VAT burden for the coal industry at 8.04% in 2018,which is more than twice the level of the average industry.The value-added rate in the coal industry under the tax law calibre reached 100.14%,seven times the general industrial level,which differs significantly from the calculation under the accounting calibre.Based on the Marxist labour theory of value and the analysis of the product cost composition of coal enterprises,the thesis argues that the main reason for the high level of VAT burden in the coal industry is the inflated value added calculated according to the tax code,which does not follow the principle of "value added taxation".As a result,the physical costs of the coal industry are not deductible in the same way as the physical costs of the manufacturing industry.In addition,the thesis evaluates the bargaining power of coal companies through an analysis of the pricing mechanism of the coal industry and concludes that the "two-track" pricing system makes it almost impossible for coal companies to pass on the tax burden to the downstream.Taking into account the cost characteristics of coal enterprises,the thesis proposes a system to include resource and environmental costs in the VAT credit chain.On the basis of this system,the thesis measures the VAT burden on coal enterprises and finds that in the raw coal business the VAT burden falls from 12.5% to around 8%,essentially the same as the average for industrial enterprises.The thesis also examines the theoretical basis for the design of this system and examines the policy precedents for calculating credits(rather than credits against tickets)at the initial link in the VAT credit chain,making the implementation of this VAT system in the coal industry more feasible.