Research On China’s Export Tax-Refund Policy Of Service Trade

Export tax-refund policy is approved by WTO and widely used in the world as a tradepromotion measure. For a long time, China’s export tax-refund policy of goods trade playsthe positive role of promoting goods export, rationalizing product structure and optimizingresources allocation. In recent years, along with the "Turning Business Tax into VAT"reform pilot program, China begins to implement the export tax-refund policy on the partof service trade.On the basis of literature review, this paper firstly theoretical analyses the economiceffect of export tax-refund policy of service trade from the four dimensions of tradepromotion, national welfare, fiscal revenue and economic growth, and concludes thatexport tax-refund policy of service trade can encourage services export, improveinternational competitiveness of services trade, maintain tax fairness, increase fiscalrevenue and promote economic growth although resulting in national welfare decline inshort-term. Secondly, this paper elaborates the current status of China’s export tax-refundpolicy of service trade and concludes that the existing China’s export tax-refund policy ofservice trade has many problems as follows: the low level of legislation; the narrow scopeand strict condition of application; the simple management system and not yet achievingcompletely tax-refund. Besides, it faces some difficulties such as: difficult to calculateexport tax-refund because of business tax system constraint; difficult to supervise becauseof complex statistics on service export; difficult to coordinate multi-stakeholder; high costand difficult to prevent tax fraud.Then, this paper builds a simple computable general equilibrium model--"1-2-3"model, with the aid of a variable: export tax-refund rate, empirical simulates themacroeconomic effect of export tax-refund policy of service trade. The simulation resultsshow that export tax-refund policy of service trade plays a positive role to promote totalexports, consumption, savings and revenue, but leads to domestic investment decline in acertain degree. Finally, this paper draws on the experience of export tax-refund policy ofservice trade in France, Britain, Switzerland, South Korea, India and other major countries in the world which combined with China’s reality and proposes some suggestions such asgradually expanding the scope of the " Turning Business Tax into VAT ", improving thelevel of legislation, optimizing tax-refund process, strengthening the construction ofhonesty and credibility, and perfecting the burden mechanism of tax-refund to furtherimprove export tax-refund policy of service trade.