Tax Credit:Influencing Factors And Economic Consequences

The State Administration of Taxation carried out Tax Credit Rating in 2014.It conducts tax credit evaluation on taxpayers on the basis of the information of corporate taxation and other information.The State Administration of Taxation adopts the annual evaluation index score and the direct rating method,the direct rating applies to taxpayers who have serious dishonesty.The annual evaluation method take the deducted way,if the recurring and non-recurring indicators of the taxpayer are complete,then the points start at 100,if the non-recurring indicators are missing,then the points starts at 90.Tax Credit Rating set A,B,C,D four level.The annual evaluation score is more than 90 points,the tax credit rating level is A;more than 70 points less than 90 points,the the tax credit rating level is B;more than 40 points less than 70 points,the the tax credit rating level is C;less than 40 points or be directly determined the level,the the tax credit rating level is D.The State Administration of Taxation published the taxpayers list of Tax Credit Rating of A level on its website in april 2015.At present,the State Administration of Taxation only announces the tax-payer A-class list,and further lists of taxpayers of Class B,C and D will be announced later.In the past,the information of corporate taxation the investors have accessed is very limited,The State Administration of Taxation conducts the Tax Credit Rating across the country and publishes the list of tax-payer A-class,will enrich the external stakeholders’ information of corporate taxation.This article studies the influencing factors and economic consequences of Tax Credit Rating.The object of Tax Credit Rating is taxpayers who have registered for tax purposes and engaged in the production,operation and levied on the introduction of audit.Since the financial data of non-listed companies can not be obtained,the research scope of this article is listed companies.Based on the information of Tax Credit Rating from 2014 to 2016,studies the influencingand the economic consequences of the Tax Credit Rating.The study found that the nature of the enterprise,refinancing needs,government subsidies are important factors affecting listed companies’ tax credit rating.The nature of the enterprise affected the tax credit rating.The research in this paper finds that state-owned enterprises are more motivated(and easier)to become tax-credit enterprises.This article further examines whether the legal system will affect the relationship between the nature of property rights and tax credit,the results show that state-owned enterprises in the lower-level western regions are more willing(more easily)to become tax-paying honest enterprises.The Impact of Refinancing Needs on Tax Credit Integrity.The results of this paper show that the listed companies refinancing their equity are less likely to be selected as tax-paying credit enterprises,the listed companies refinancing their equity are less likely to be selected as the tax-paying integrity enterprises in both the eastern part of the country with higher legal system and the central and western parts of China with lower legal level.And listed companies with financing needs in the eastern region with higher are more likely to be selected as tax-paying integrity enterprises than those in the central and western regions with poor legal level.The Impact of Government Subsidy on Tax Credit Honesty.The result of this paper shows that the listed companies with more government subsidies are more motivated(easier)to be selected as tax-paying integrity enterprises.The article divides the sample further into two groups: the listed companies are in provinces with fiscal surplus and deficit provinces.The results show that the listed companies with the higher government subsidies in the fiscal surplus provinces are more motivated to win the title of tax-paying integrity enterprise.The test results of the economic consequences of tax credit rating show that the tax credit of the listed companies can reduce the audit fees,and the tax credit can make it easier for listed companies to obtain commercial credit financing.Tax credit can reduce audit fees.The results of this paper show that audit fees of tax-paying honest enterprises are indeed significantly lower than those of non-tax-credit ones.Further research shows that audit fees of state-owned tax credit enterprises are significantly lower.Enterprises of tax credit are easier to obtain commercial credit financing.The results of this paper show that tax-paying integrity firms are easier to obtain commercial credit financing.Further research shows that tax credit has more significant impact on commercial credit financing in state-owned enterprises and in the lower legal level of Midwest.At the end of this paper,we also studied whether tax-credit A-level companies have less earnings management and whether the quality of accounting information is higher.This paper finds that tax-credit A-level companies selected by the State Administration of Taxation do less to manage earnings and have higher quality of accounting information.However,the results obtained by using a traditional measure of tax avoidance to test tax credit A-level companies are not the same as expected.Using the traditional measure of tax avoidance,the conclusion is that tax-credit A-level companies have more tax avoidance.The main reason for this result may be the flaws in the previous indicators for measuring tax avoidance.This paper studies the influencing factors and economic consequences of the taxpaying credit of listed companies,the result of this paper shows that the taxpaying credit status of listed companies has abundant information content.The result of this paper can not only enrich relevant research experience on tax evasion and corporate tax payment,but also provide information for the implementation of the tax credit rating policy.