The Simplification Of VAT Rate And Financial Investment Of Entity Enterprises

The report pointed out: "Accelerate the construction of a new development pattern,focus on promoting high-quality development","high-quality development is the primary task of building a modern socialist country in an all-round way",but in the process of high-quality development of the real economy has to face the real problem is that real enterprises invest funds in the financial industry rather than industry.Therefore,the problem of financial investment behavior of real enterprises has aroused wide attention of the CPC Central Committee,The State Council and relevant departments.The 2022 Government Work Report points out that "strengthening the effective support of finance to the real economy".In addition,The importance of developing the real economy and preventing and defusing major systemic financial risks has been repeatedly mentioned in important meetings and occasions such as the government Work Report and the Central Economic Work Conference since 2016.It can be seen that in the context of preventing and defusing systemic financial risks and continuing to do a good job in the "six stability" and "six protection" work,how to effectively curb the widespread financial investment behavior of real enterprises has become an urgent problem to be solved.At the same time,tax policies play an important role in restraining the financial investment of real enterprises.As the major stage of the comprehensive reform of VAT,can the VAT rate simplification policy effectively inhibit the financial investment of real enterprises?Unfortunately,the existing literature mainly studies the effect of VAT transformation and reform,the policy of "replacing business tax with VAT",the policy effect of VAT rate reduction,and the influence of macro and micro factors such as economic policy uncertainty,industrial policy,CEO’s financial background,and the internal capital market of the group on the financial investment of real enterprises,while few literatures study the governance effect of VAT rate simplification on the financial investment of real enterprises.So,what is the effect of VAT rate simplification on the financial investment of real enterprises? What is the mechanism of action? Furthermore,the influences of property right nature,firm size,bargaining power,digital transformation degree and financial ecological environment on the relationship between VAT tax rate simplification and financial investment of real enterprises are investigated respectively.Therefore,this paper selects the sample data of China’s A-share listed companies in Shanghai and Shenzhen from 2015 to 2019,takes the introduction of VAT rate reduction policy in 2017 as the standard natural experiment,and uses the differential difference method to empiricately test the relationship between VAT rate reduction and financial investment of real enterprises and the mechanism of action.The results show that VAT tax rate simplification inhibits financial investment of real enterprises by increasing investment in main business,alleviating financing constraints faced by enterprises and improving the return on real assets.Heterogeneity test shows that the above inhibition effect is more significant when private enterprises,small scale,strong bargaining power,high degree of digital transformation and better financial ecological environment.The theoretical significance of studying the effect of VAT rate simplification on the financial investment of real enterprises lies in: broadening the theoretical research on the policy effect of VAT rate simplification and the influencing factors of financial asset investment of real enterprises;The effect mechanism of VAT rate simplification on financial investment of real enterprises is explored.This paper reveals the heterogeneity of the effect of VAT degeneracy on the financial investment of real enterprises under different situations.Practical significance lies in: it can provide empirical evidence at micro level for further simplifying VAT rate,preventing systemic financial risks and promoting high-quality development of real enterprises;It can provide empirical evidence for the government to optimize the VAT rate simplification policy,and finally improve the sense of gain of tax payers.