The Research On Designing And Countermeasures Of Program Of Business Tax Shifting To VAT In Banking Industry

The financial industry is the leading sector for the promotion of national economic and plays an important role in the social development. The banking industry is the core area of the financial sector, as credit intermediary, it can optimize resource allocation, promote investment, and plays an effective role for the national economic growth in the market economy. After the2008financial crisis, the world began to strengthen financial regulation and develop related polices to make macro-control and micro-control effective, and strived to build stable and orderly environment for the development of the financial sector. Among national regulatory policies, tax policies play an important role in affecting the operation and development of the banking sector. In1994, China began comprehensive tax reform. The tax system formulates that China’s banking industry should be collected sales tax, which was adapt to the financial system and economic system,and it ensured revenue and made highlighted contribution to promoting economic growth within a specific period of history.The Ministry of Finance and the State Administration of Taxation issued "Pilot Proposals for the Change from Business Tax to Value-Added Tax", in Shanghai on January1,2012, and sought in a nationwide structural taxation cut to promote the development of China’s service industry."Business Tax Reform of VAT" has become the main theme during the next National Twelfth Five-Year Plan period. The sales tax running in the banking sector exposes many drawbacks, so the banking sector should be selected as the next reformation area of "Business Tax Reform of VAT" preferentially, and eventually the reformation should be expanded to the entire financial sector.The "Business Tax Reform of VAT" of the banking sector is confronted with a series of difficulties such as how to set the implementation model of the VAT and how to determine the scope of the taxation. And there are many obstacles theoretically and technically within the expansion of the VAT in the sector. Studying a large number of relevant literatures, the author comprehends the history and evolution of the tax system in the banking industry. According the characteristics and the level of competition in China’s banking industry, we find that our current tax system of the banking business has many drawbacks, and it is not conducive to the deepening of China’s financial reformation and improvement of the international competitiveness. It is necessary and imperative to implement VAT in the banking sector, while there are difficulties in the reformation. On this basis, the author puts forward effective proposals on taxation model and designs VAT system in banking sector. The paper selects related data from the annual report of china’s ten large commercial banks and calculates the VAT rate. According to results, the author proposes effective recommendations on polices supporting the implementation of the program.