Research On China’s Agricultural VAT Preferential Policy

The problems with agriculture-rural areas-farmers have been playing a decisive role in the development of Chinese economy and society. The taxation policy on agricultural products especially the VAT policy on those is the fundamental basis to promote the development of agricultural economy, deepen the process of agricultural industrialization and increase income level of the farmers. Since Shandong Province is a big one producing and exporting agricultural commodities, this article intends to find the problems existing in the implementation of VAT policy on agricultural products in China, the development of processing enterprises and the implementation of VAT policy on agricultural products of Shandong Province, with the method of data analysis and case analysis; to propose suggestions for the perfection of the Chinese VAT policy on agricultural products, using the western experiences for reference.This paper is divided into four sections. Section one mainly introduces the context and meanings of the research on China’s VAT policy on agricultural products, preview of the related literature and the thoughts and main view points of the research. Section two illustrates the history and current situation of China’s VAT policy on agricultural products and analyzes the effects of China’s preferential VAT policy on agricultural products through reviewing the Provisional Regulations Concerning Value-Added Tax> and the Rules for its implementation, together with relative notices and papers. Section three, through some relative data and cases, illustrates the disadvantages in system and tax collection and administration, which include:the difficulties in defining the range and specific accreditation, the irrationality of the design of preferential VAT policy, the imperfection in supervision of purchasing invoices, the unfairness caused by the preferential tax policy, the lowness of tax rebate rate and the lateness in tax rebate and the difficulty of the administration of VAT of agricultural products. Section four makes some suggestions on perfecting China’s VAT policy on agricultural products, which mainly contains executing deduction of import tax of VAT, strengthening the management of agricultural purchasing invoices and other relative measures, for example, enlarge the range of agricultural primary products, lower the VAT rate on agricultural products and tax preliminary processing enterprises and deeper processing enterprises at a consistent tax rate, unify the basis of computation of tax on the import tax and output tax, strengthen the management of agricultural purchasing invoices, undertake thorough tax rebate policy on encouraged agricultural exports, enhance the management of agricultural VAT’s collection through cooperation among departments and classified regulation.Agricultural VAT policy is an extremely important and special component of China’s VAT system. It is of high realistic meaning to do research on agricultural VAT policy. The execution of preferential VAT policy has many positive effects such as the increase in the supply of agricultural production goods, the improvement in the farmers’income level, the increase in the number of agricultural processing enterprises and the increase in the scale of agricultural exports while the price of agricultural products doesn’t fall down because of the price lag; There’re many problems in the current preferential VAT policy which mainly contain the ambiguity of the specific accreditation of agricultural primary products, the great loss of tax caused by the loopholes in the management and collection of agricultural purchasing invoices, the unfairness in tax burden led by the systematic irrational design of agricultural preferential VAT policy, the imperfection in the agricultural tax rebate policy and the lateness of tax rebate; Evaluating the deduction in the import tax is an important component of perfecting the agricultural preferential VAT policy. Thus it perfects the VAT deduction mechanism through changing from "deducting by invoices" to "deducting by evaluation", and avoids the intention of falsely issue at its source. Certainly it will effectively solve the problems caused by the "deduction by invoices"...