A Research On Expanding The Scope Of VAT In China

It has been more than ten years since VAT was implemented in China. As the largest tax in China, VAT plays an active role in raising revenue, promoting efficient allocation of resources, and so on. But in the course of implementation, VAT constantly exposed some problems. After the transformation in 2009, we should expand the scope of VAT. In order to upgrade the industrial structure and develop the service industry during the Twelfth Five-Year Plan period, the Treasury put forward in the report that they were going to improve the tax system, that is, to expand the scope of value-added tax, reduce business tax, adjust the range and rate structure of consumption tax.2011 is the first year of the Twelfth Five-Year Plan period, the Treasury was planning to finish the personal income tax and VAT reform., a new personal income tax policy has been released by now, the VAT reform is on its way. This paper draws on the theory of international VAT status of research and practical experience, based on domestic scholars in previous studies, then gives an idea of expanding the scope and a specific measure of rate.There are four parts:Chapter One is an introduction. This part firstly presents the purpose of the study and its significance, the state of domestic and foreign research, research methods and paths, innovative ideas and shortcomings are described.Chapter Two starts from the features of VAT, explains the advantages of a wide range of VAT. Comparing the foreign practice of VAT, as well as the changes of VAT since its introduction in China, it concludes that expanding the scope of VAT either at home or abroad is a trend. Finally, China's current VAT and business tax are levied in parallel, thus bring out a range of issues, so expanding the scope of VAT is necessary.Chapter Three is a specific idea about the expansion of VAT. There are still differences in the select of the steps and orders. One of the reasons why services should change from business tax to VAT is that it can reduce the tax burden on services, to promote its development. However, form the financial perspective, because of the important role of the turnover tax in China, expanding the scope of VAT will affect the revenue a lot. Therefore, the paper argues that VAT reform should be implemented step by step. After considering the feasibility and necessity, we can firstly select transportation. In the specific tax design process, we must make clear several principals: not to increase the tax burden; not to increase the VAT rate grade; not to cause a significant reduction in revenue. Under these premises, all tax elements are defined. In the process of determining tax rates, based on historical tax revenues and transportation sectors data, and ultimately theoretically determine the rate of 13%. Then according to the designed framework of the tax system, randomly selects four quoted transportation company, further confirms the feasibility of VAT on transportation.Chapter Four gives some policy recommendations on the possible problems about the financial system, financial institutions and tax collection.Literature review and data analysis are mainly adopted in this paper. Using a large number of financial data and industry data, from the theoretical analysis to the simulation analysis, then put forward a complete and specific tax framework.