Study On The Financial Impact Of Replacing The Business Tax With The VAT In The Transportation Enterprise

In1994, China implemented the tax reform, tax sharing between national tax and localtax. At that time, double main taxes both income tax and turn over tax was established by theState Administration of Taxation. When the value-added taxation transformation reformrealized the cut of tax in1994, equation were broken in the two taxes. Because of the taxunbalance, it retards the adjustment of industry structure. So VAT expanding circumference isneeded.Replacing the business tax with the VAT is an important structural tax cuts during the12th Five-Year Plan. October26,2011, the State Council executive meeting decided to carryout the value-added tax system reform in some regions and industries and replacing thebusiness tax with the VAT gradually in the industries with business tax from January1,2012.The reform forced on transportation and modern service industry in Shanghai form January1,2012. And it was extended to the country to trial.As a basic industry, transport has a close relationship with the industry involving VAT.For transportation, levying VAT is conducive to international standards. Establishing astandardized VAT system which fits to the modern market economy system will have a verysignificant and far-reaching impact on the transportation industry.The paper analyzes the impact of replacing the business tax with the VAT intransportation from corporate tax, income and other aspects. Scholars in China have donesome theoretical and practical research. Based on some representative listed transportationcompanies, the paper will do an empirical analysis to test the effect of the reform ontransportation from the perspective of corporate finance professionals. The paper will providesome recommendations for the VAT expanding, and hope this will help the further reform ofVAT.