Research On Accounting And Administration Of Consumption-type Of VAT

In the history of Chinese tax system, VAT has experienced 4 periods. The first period is from 1979. Drawing lessons from the foreign countries, it has experienced 3 stages including the pilot stage, expanding pilot stage in particular products’industrial process and totally implementation stage in all process. In the second period, to modify tax system and based on the situation in China, the State Council enacted Provisional Regulations on Value Added Tax in Dec.13th 1993, and the Ministry of Finance enacted Implementation of Provisional Regulations on Value Added Tax in Dec.25th 1993. Therefore, the production-type of VAT was applied in Jan.1st 1994. In the third period, after many discussions, the transformation of VAT finally was written in the government’s document after 8-year experts’arguments. In the forth period, In order to expand domestic demand, release enterprises’tax burden and promote industries’structural transformation, in 11/2008, the State Council decided to implement a VAT transformation which is from the beginning of 01/01/2009, the consumption-type of VAT will be adopted in all areas and industries in China. There are several benefits of consumption-type of VAT as follows:First, enterprises will be more willing to improve and innovate their technology. Second, the enterprises’industrial levels will be promoted and advanced. Third, the taxation will be fairer and more and more good tax sources will be found. By doing so, the tax income will be increased stably and last. However,2009 is the first year the consumption-type of VAT implemented. There are many difficulties in the process of practice. If these problems are not solved, the effect of the policy implementation must be influenced. Therefore, based on the systematically introduction of the VAT theories, this paper adopts the method of comparative analysis to analyze the different accounting solutions of fixed assets when referring to the different type of VAT. In addition, it also takes the method of relative analysis to analyze related fiscal report items and fiscal index. Moreover, it points out some problems existed in the accounting of fixed assets when the consumption-type of VAT is applied and also some suggestions. Likewise, the paper takes some data of Chongqing XX Auto Co. Ltd as an example to empirically analyze its fiscal index before and after the VAT transformation and to get a total understanding of the influence of VAT transformation on enterprises’ fiscal index.From the view of one of the fiscal reports information users——the tax authority, the paper is based on the analysis of influence of consumption-type of VAT. The author takes his experiences in the administration of tax to bring forward some advices to the problems of the administration of consumption-type of VAT. In this way, the tax departments will advance their management in the new situation, the tax policy will be effectively implemented, and the tax will be collected in time and adequately avoiding tax erosion.There are 6 parts in the paper.1. Introduction. In this part, it shows the background, meaning and the research methods of the topic and introduces the current situation of the theoretical research on the consumption-type of VAT implementation.2. Basic theories of VAT. In this part, it introduces the VAT system, content, characters and some related theories. It adopts the method of comparative analysis to compare different types of VAT and analyzes the background, framework and meaning of the implementation of consumption-type of VAT.3. The accounting of consumption-type of VAT. Based on the examples, the paper analyzes the differences of accounting of fixed assets between production-type of VAT and consumption-type of VAT. Some problems in the accounting of fixed assets after consumption-type of VAT is implemented are mentioned. And some advices are given. Meanwhile, the paper analyzes the influences that the implementation of consumption-type of VAT affected to the fiscal reports, fiscal index, fiscal adventure and other aspects.4. Case analysis on the Chongqing ⅩⅩauto Co. Ltd. Combined with the work experiences in Chongqing State Tax BureauⅩⅩBranch, the author takes ChongqingⅩⅩauto Co. Ltd. as an example to analyze its change of fiscal index and to prove the effectiveness of the theories. In this way, a conclusion about the influences of the implementation of consumption-type of VAT is drawn to.5. The risks and the problems about the administration of consumption-type of VAT.2009 is the first year the consumption-type of VAT implemented. Many hot issues and difficulties are in the actual operation. From the view of one of the fiscal reports information users——the tax authority, beginning with the change of the accounting and the related fiscal index, combined with the practice in the work, the author analyze the risks and the problems of the tax management in the process of policies’ implementation. In this way, the tax administration level will be promoted, some problems of tax levying and management will be avoided, and finally tax erosion will be avoided.6. Suggestions about improving the administration of consumption-type of VAT. As to the risks of tax administration, relating to the characters of accounting after the implementation of consumption-type of VAT and tax management practice, emphasizing on the accounting of fixed assets and the enterprises’fiscal report, the author gives some advices on the bettering administration of consumption-type of VAT.The major achievements of this paper:By comparatively analyzing these aspects before and after the VAT transformation as follows:the accounting of fixed assets, fiscal reports’ items, fiscal index, fiscal venture and other related aspects, the author tries to draw a conclusion about the implementation of consumption-type of VAT’s effect to the accounting, some problems and some advices. Some examples are given, and the changes of the enterprises’ fiscal reports and index are analyzed. At the same time, combining with the work experiences, the author concludes the risks and problems in the administration of tax and puts forward some advices to improve the administration of tax authorities, strengthen taxation according to the law and avoid tax erosion.Inadequacies of this article:Due to the short period of the implementation of consumption-type of VAT, some related materials and references are lacked. And the author is limited to the theories. Some inadequacies are unavoidable.First, theoretical analysis is not enough. After VAT transformation, the accounting becomes practical. Therefore, the analysis and utilization of accounting and fiscal index are emphasized. However, some general analysis of accounting theories is not enough.Second, the verification of countermeasure and suggestion is inadequate. The author just brings forward some suggestions based on its own experiences, and he doesn’t verify these countermeasures and suggestions from wider range and higher level.