The Impact Of Replacing Business Tax With VAT On The Transportation Industry

Transportation industry is an important part of our national economy. Itis closely linked with production and circulation and occupies an importantposition in the producer services. Business tax has always been imposed intransportation industry. However, business tax, due to its existing problem ofdouble taxation and its failure in input tax deduction, has restricted thedevelopment of the transportation industry.Value added tax (VAT) and business tax are two of the most importantturnover taxes for the state. In our current tax system, double taxation is oneof the most striking structural problems existed, which is not only bad forthe overall operation of the economy, but also leads to heavy tax burden tothe enterprises. Since2012, our country has put efforts to the reform oftaxation system, including replacing the business tax with VAT. Through thispolicy, it is meant to regulate the business activities of enterprises, and thusreduces their tax burden. Therefore, it is expected that the reform should beof great benefits to transportation industry, and then make contribution toboost consumption.This paper first introduces the research background and researchsignificance, the related literature achievements and research methodspresented in this paper. In the second part, the author introduces value-addedtax policy in other countries and its experiences that we can learn and makeuse of. Also, in this section, the author shows us the current situation in ourcountry. Through analyzing the characteristics of transportation industry andthe problems appeared in the collection of business tax from it, the authorbelieves that it is quite necessary to replace business tax with VAT. And inthe last part, according to the financial data of ABC in2012, the authorsimulates the calculation in order to conclude the impact of replacingbusiness tax with VAT for enterprise’s tax burden and net profit, the authoralso put forward some suggestions to the enterprises and hopes that these suggestions will be of some help to the further reform of replacing businesstax with VAT in transportation industry.