Research On The Impact Of Tax Incentives On The Profitability Of Elderly Care Service Enterprises

With the development of society,the aging of China’s population is deepening and the issue of elderly care is receiving more and more attention from the society.In the past decades,China’s senior care service industry was mainly supported by public non-profit senior care institutions established by government investment.However,with the rising elderly population in China and the increasing financial pressure on the country’s elderly care,the government alone cannot meet the expanding demand for elderly care services,and there is an urgent need to introduce a new development model for the elderly care service industry.In recent years,in order to encourage social capital to actively participate in the elderly service industry,the Chinese government has introduced a series of tax incentives.However,due to the inadequacy of the existing tax incentives and the fact that the elderly service industry is a new industry with large investment,slight profitability and long payback period,the profit level of elderly service enterprises is generally low,which makes it difficult to attract social capital to invest in the elderly service industry and hinders the development of the whole industry.Therefore,in order to promote the development of the elderly service industry,this thesis mainly studies the influence of tax preferential policies on the profit level of elderly service enterprises,and on this basis,puts forward relevant suggestions for improving the tax preferential policies enjoyed by elderly service enterprises.This thesis adopts a combination of theoretical analysis and empirical research of enterprises.Firstly,from the background related to the development of senior care service industry,the practical and theoretical significance of this thesis’ s research is explained,and the relevant researches of domestic and foreign scholars are summarized.Secondly,the concepts of senior care service industry and enterprise profitability are defined,and the relevant theoretical basis of the study is sorted out,and the mechanism of the effect of tax incentives on the profitability of senior care service enterprises is analyzed.Then,the development status of the senior care service industry and enterprises is analyzed,the tax preferential policies of the senior care service industry in recent years are sorted out,and the shortcomings of the current tax preferential policies are pointed out.Finally,the effects of income tax preferences and VAT preferences on the profitability of listed companies in senior care services are analyzed separately through multiple regression models using relevant financial data of listed companies in senior care services as research samples.The following conclusions are drawn from the empirical analysis: i.Tax incentives can improve the profitability of listed companies in senior care services.Tax incentives can reduce the tax burden of enterprises,which in turn can increase the level of net profit of enterprises and ultimately improve their profitability.Ⅱ.The incentive effect of VAT incentives on improving the profitability of listed companies in senior care services is stronger than that of income tax incentives.The regression analysis results show that the tax burden coefficient of VAT is 4.2 times higher than that of income tax,which means that if the same preferential strength is given to income tax and VAT,the effect of VAT on enhancing corporate profitability will be 4.2 times higher than that of income tax;third,the income tax preferential strength enjoyed by listed companies in senior care services is limited.The empirical analysis shows that the income tax burden of listed companies in senior care service is 22%,which means that the preferential income tax rate is only 3%,so the income tax preferential strength that senior care service companies can actually enjoy is very low;fourth,the overall profitability of listed companies in senior care service is low.In the selected sample data,the average return on net assets of listed senior care service companies is 5%,which is much lower than that of companies with good operating conditions,which indicates that listed senior care service companies generally have the problem of low profitability.The following conclusions are drawn from the empirical analysis: i.Tax incentives can improve the profitability of listed companies in senior care services.Tax incentives can reduce the tax burden of enterprises,which in turn can increase the level of net profit of enterprises and ultimately improve their profitability.Ⅱ.The incentive effect of VAT incentives on improving the profitability of listed companies in senior care services is stronger than that of income tax incentives.The regression analysis results show that the tax burden coefficient of VAT is 4.2 times higher than that of income tax,which means that if the same preferential strength is given to income tax and VAT,the effect of VAT on enhancing corporate profitability will be 4.2 times higher than that of income tax;third,the income tax preferential strength enjoyed by listed companies in senior care services is limited.The empirical analysis shows that the income tax burden of listed companies in senior care service is 22%,which means that the preferential income tax rate is only 3%,so the income tax preferential strength that senior care service companies can actually enjoy is very low;fourth,the overall profitability of listed companies in senior care service is low.In the selected sample data,the average return on net assets of listed senior care service companies is 5%,which is much lower than that of companies with good operating conditions,which indicates that listed senior care service companies generally have the problem of low profitability.Finally,based on the findings of the empirical analysis and the problems of the current tax incentive policy for the elderly service industry,this thesis puts forward targeted optimization suggestions for the tax incentive policy for the elderly service industry.These include: i.Raising the legislative level of the tax incentive policy for the elderly service industry.The legislative level of tax preferential policies for senior care services should be raised to improve the authority and accuracy of the policies;second,strengthen the VAT and income tax preferences for senior care services.The empirical results show that the tax preferences enjoyed by the elderly service enterprises are very limited,so in order to effectively promote the development of the elderly service industry,it is necessary to further strengthen the tax preferences;third,expand the scope of tax preferences for the elderly service industry.The current tax incentives cover a very limited scope,mainly focusing on welfare non-profit senior care institutions,and there is a lack of tax incentives for profit-making senior care institutions,which are an indispensable part of the development of senior care service industry and can improve more efficient senior care services to the society through market allocation,so it is suggested to further include profit-making senior care institutions into the main scope of tax incentives.