A Research On China's VAT Evasion Under The New Situation

Tax evasion has always been on the concentration of tax collecting works. Early since 1994, Valued-Added-Tax (VAT) has been the main tax of our country. Its evasion has been a severe problem. Therefore,"the Golden Tax Project"which aims at improving the administration of VAT has been putting into practices. After the second span of"the Golden Tax Project", the making out of mendacious VAT standard invoices has been kept under control. However, it has turned to some more concealed means such as disguising sales income and making use of the four minor invoices. It is necessary to investigate on ways to restrain VAT evasion in order to collect enough revenue and to build a healthy socialism market economy. It starts by analysis on measures of VAT evasion in the new situation. Then it discusses both systematic and nonsystematic factors that influence VAT evasion. Finally it brings forwards suggestions of avoidance of VAT evasion on the basis of using experiences of other countries for references.The body of this article is divided into five parts:The first part introduces the basic theory of tax evasion. It first defines the"tax evasion". Then it analyses the classical tax evasion model----the A-S model, which is set up by Allingham, M.G., Sandmo, A. and Srinivasan, T.M., explaining how taxpayer acts on the assumption of expectation-maximum. The conclusion of those models is that: factors that influences on tax evasion are tax rate, find-out rate, punishing rate and the material and emotional cost of it.The second part is about means of tax evasion in the new situation. In our country, taxpayers of VAT are divided into two groups according to the condition of their financial system: normal VAT taxpayers and trivial VAT taxpayers. As the supervisions for them are different, their ways to tax evasion are also different.On the basis of part two and part one, part three analyses reasons for VAT evasion in the new situation. In nowadays new economic situation, VAT evasion is a severe problem. This can be attributed to both loops on VAT system itself and the administration on it. Also, the outer environment, for example, the tax obedience level is low in our country, can be blamed. Among these, the loop of VAT system itself is the basic reason and other three factors are the minor reasons. They all distribute to the severe VAT evasion. We should find out ways to restrain VAT evasion in these four directions.The forth part introduces the experiences of foreign countries on restraining VAT evasion. VAT has many problems since it was introduced into our country. It is necessary for us to seek help from foreign countries'experiences on VAT administration, especially from the European developed countries. It mainly focuses on VAT system itself and the administration on it.The fifth part concludes ways of preventing VAT evasion for our country on the basis the above analysis in those four parts. This article holds that we should restrain VAT evasion in four aspects. First of all, to perfect the VAT system in our country is the fundamental measure. Secondly, reform and perfect the present invoice administration system. It is suggested that in short run we promote the operation of"the Golden Tax Project"and in the long run we cancel the VAT administration mode that places the invoices as fundamental. Thirdly, promote the tax-collecting institution's effectiveness on VAT administration. Finally, it is important to set up a favorable environment for tax-collection. This article focuses on the first three aspects.The innovations of this article includes: (1) the point of view in research on the problem. It combines the systematical loops and the practices. (2) The grounds of argument. After the promotion of"the Golden Tax Project", measures of VAT evasion have been updating. This article presses on the newly emerged measures. (3) This article brings forward a new mode for the administration on VAT standardized invoice.