The VAT Reform For Broadening The Tax Base And Design Of Tax System For Financial Lease In China

In October 2008, the 11th NPC standing committee put "VAT legislation" into legislation programming,as the first kind of legislation in the next 5 years.since January 1 2009,the transformation of VAT has been carried out in the nationwide in China. Since then,the general buyers can claim the input tax deduction,when they have the fixed assets.These make a great breakthrough in China’s VAT reform.Then the state council put VAT legislation into "2010 legislation work plan ",as the most important part.The tax base of VAT will extend to all third industry,so all of the goods and services will be subject to VAT.Before these works being finished(The VAT reform for broadening the tax base), Some special industry those linked with goods and services closely will fall into a policy vacuum period,such as financial lease.In China,Financial lease has had a long development history in nearly 30 years.It grows into a high-speed realty in the first ten years of 21th century.The business scale of financial lease increased quickly form＄30 billion in 2006 to＄227 billion in 2008.However, according to the new deduction policy in 2009, The general taxpayers can not claim the input tax deduction,when they "buy"fixed assets through the way of financial lease.because the lessors due to inability to sign VAT invoices to the lessees.Combined with the unfair goods and services tax policy,The financial lease in China has run into a "dilemma".In such a transition period,the VAT reform needs to broaden the tax base and the financial lease needs to break away from the "dilemma" as soon as possible.Based on such a reality of urgent need, the author chooses to "The VAT Reform for Broadening the Tax Base and Design of Tax System for Financial Lease in China" for his master’s thesis topic. This paper tries to put the financial lease into VAT tax base,and perfects the goods and services tax of financial lease.So,the lessor can sign a VAT invoice,and the lessee can claim the input tax deduction.These changes will promote the development of the financial lease in China.In a whole,this paper is composed of four primary chapters.The first chapter,briefly introduces basic goods and services tax policy of financial lease in China,and focuses on the problems on the policy.Financial lease’s "delimma" is primary attributes to these problems.The second chapter,based on the financial lease tax policy in worldwide.comparisons and analysis there goods and services tax models,called American model,European Union model and Australia model.Financial lease in those models respectively subject to sales tax in American,value added tax(VAT) in European Union,goods and services tax(GST) in Australia.The third chapter,focuses on the transformation of VAT,and tries to design a new tax policy for financial lease,in the VAT circumstance.However,the author just design one form of financial lease called directly financial lease,which is the basic and the uppermost.The fourth chapter,combined with the contents of this paper,tries to find out the hardness in designing the new VAT policy for financial lease. To solve these hardness,is the key to designing successfully.The contribution of this paper has the following mainly:Firstly,provides theoretical supports for the VAT reform,specially for broadening the tax base.Financial lease can be subject to VAT in future.Secondly,perfects the financial lease tax policy in an unique point.and solves the problems well,such as,unfair tax policyinterrupt of "in put tax deduction"chain,double taxed.Thirdly,it has a long-term research meaning.