Research On The Banking Turnover Tax Reform Of China

The reform of replacing the business tax to VAT is an another major turnover tax reform after the reform of VAT transition in our country. On January 1,2012 the pilot reform of replacing the business tax to VAT begin from Shanghai in"6+1 "fields,after then the reform expanded to other areas and fields, now already covered part of the modern service, all transportation industry, postal services and telecommunications across the country. On March 24,2016 the ministry of finance and the state administration of taxation jointly issued the regulation [2016] no.36 file——《About thoroughly enforce pilot reform of replacing the business tax to VAT》 and relevant detailed rules, On May 1,2016 construction industry, real estate industry, financial services and living services will be officially covered in the reform of replacing the business tax to VAT, business tax may exit from historical stage, the reform of banking turnover tax is coming.Banking industry is core part of the financial system, providing service and support for the development of the real economy, playing an important role for the healthy development of national economy. It has contact with various industries, all participants in economy, acting as a "bridge" role. Since China’s reform and opening up, China’s banking industry rapidly developed under the protection of the national policy, has been known as the "profiteering industry", under the protecting government’s policy China’s banking industry did not impacted in the 2008 financial crisis. However, in recent years, under the background of the interest rate marketization and other countries have taken measures to support the banking industry, our banking industry has entered into a slow developing stage, under these objective conditions, the purpose of the banking industry’s reform of replacing the business tax to VAT should not only to tax cuts, but should aim to change the current unfavorable turnover tax system that hindering bank’s development. Based on this background, this article attempts to analyse and compare our country’s banking business tax system, the new policy about the reform of replacing the business tax to VAT and other countries’banking turnover tax system, using empirical method to demonstrate distortion effect of turnover tax burden to banking operating performance and business choice behavior, at the same time simulation calculated change of the banking turnover tax burden after the reform of replacing the business tax to VAT, providing decision-making reference to further improvement of our country’s banking’s turnover tax system.This paper is divided into six chapters, in addition to the introduction part, the remaining chapters are arranged as following:the second chapter is the exposition of current turnover tax system of our country’s baking industry, start form main services of banking analyses the current business tax of banking and its’ disadvantages, the new policy of the reform of replacing the business tax to VAT at banking industry, comparing this two turnover tax system, finding the new turnover tax reform’s advantages and disadvantages, the third chapter is the practice of other countries’ banking’s turnover tax, form incidence of tax and measure of taxing too aspects analysed other countries’ banking’s turnover tax system, found that generally used wide tax base with low tax rate or narrow the tax base with low tax rate policy, the turnover tax burden is far lower than our country’s banking industry, our country’s banking turnover tax system is not conducive to its’healthy development, the fourth chapter is the empirical anaysis of the relationship between banking’s turnover tax burden, operating performance and business choice behavior, using the financial panel data of 16 listed banks in China and chosed static panel model and dynamic PVAR model to analyse their relationship, we find that turnover tax burden has distortion effect to banking operating performance and business choice behavior, the fifth chapter is the calculating of banking industry’s turnover tax burden after the reform of replacing the business tax to VAT, using the financial data in 2004 of 16 listed Banks calculated their change of the amount of the turnover tax and turnover tax burden after the reform, find that after the reform both of them might increase, the sixth chapter’ is the problem and political advices about our country’s banking turnover tax reform, should allow Banks to offset its interest payments in the long term, timely adopt preferential tax transitional policies, banks should complete the preparation before the reform and tax authorities should enhancing their professional ability and tax service.