Vat On Listed Companies In The Extractive Industries Of Financial Performance

In the early period of the reform and opening-up, production-based value-added tax was chosen in the process of value-added tax (VAT) reform in 1994 in order to increase the two"proportion"and strengthen macro-control ability of the central government. However, along with our country economy development, many problems have emerged from production-based value-added tax. Since the 21st century, China's rapid economic development, the markedly improved economic benefits of enterprises and the remarkable improvement of financial strength have provided reliable material guarantee for the VAT conversion. Regulations of"several problems on widening the deduction range of VAT in northeast China"were issued on September 14, 2004. The pilot program of VAT conversion extended to the six provinces of central China on July 1, 2007. The greatest difference between the two is that the extractive industry is brought into the pilot program. As a fundamental industry of the national economy, the extractive industry is in a pivotal position. However, the extractive industry is backward in technology, equipment and the utilization pattern, which results in large amounts of mineral resource waste and serious pollution to the environment and intensifies the shortage of domestic mineral resource. Therefore, mining enterprises faces the pressure of optimizing product structure and innovation reform in technology and they urgently need the support of the policy of VAT conversion. The series of questions like whether the implement of the VAT conversion has an effect on the mining enterprises performance, and to what extent the influence is if there is such kind of effect need to be probed into. Therefore, this research is of great urgency and necessity.The first part focuses on the literature review related to the research of value-added tax, from which it turns out that relatively few reviews can be found on the influence of the VAT to the enterprises from the macro perspective, let alone the empirical study of the influence to the performance. Therefore, the problem on the influence of VAT is worth further researching from varied prospects; the second part introduces the related theories of VAT and the performance of enterprises. Firstly it illustrates the major theory of VAT which expounds the nature, formation, development, its types and characteristics; secondly, it describes the theories of VAT reform which mainly introduce theory of equitable taxation, theory of optimal taxation and theory of fiscal exchange, and besides it also elaborates the feasibility and necessity of VAT reform and the reforming course of VAT reform in China. Lastly, some knowledge about financial performance is given. The third part firstly introduces the situation of the development of extractive industry and the state of the mineral resources. Recently, the general situation of the mineral resources is reflected in the following aspects: large amount of resources, low per capita resources, poor resource structure, great exploration potential, and the obvious contradiction between supply and demand. Certainly, at present it is becoming better and better in reasonable use and protection of the mineral recourses in China, and the layout and structure of exploring and development has been optimized. Besides, the international cooperation on exploring and development has greatly improved and the use of overseas resources has been increased gradually. Then it introduces the basic information about the listed companies in extractive industry and the content and characteristics of VAT reform of the experimental unit. In addition, it also illustrates the influence of the VAT reform to the financial performance of the listed companies in extractive industry, according to which the influence of VAT reform is quite difference based on the amount of the fixed asset investment, production time and channels of raising funds. The fourth part makes an empirical analysis about the financial performance effects of value-added tax transformation on listed companies in the extractive industry based on 23 listed companies. The result shows that the transformation of value-added tax has greatest effects on the profitability, and enterprise's profitability generally can be reduced during the transformation, but in the long run, it will get strengthened. On the other hand, the transformation of value-added tax has lagging effects on the financial performance of enterprises. The fifth part puts forward some suggestions on the improvement of value-added tax in China based on theoretical and practical analysis.