VAT Reformation Tax Effect On Telecom Industry

The widespread use of VAT taxation is mainly because the tax source is the added value, and it is conducive to the elimination of double taxation, and refine the division of labor and make production and management structure more reasonable. Since the 1994 tax reform, China has basically established a dual tax structure which is subject to both income tax and turnover tax and the turnover tax is more important, particularly the VAT, which is a fast growing and increasingly important tax. At present, China is in the time for adjusting the economic structure and wants to improve the tax system in the critical period to meet the needs of modern economic development in a timely initiative. In June,2014, the VAT reform of telecommunications industry was officially launched, and there is no business tax any longer. The main turnover tax is the added-value tax.In this paper, with the background of VAT reform and combined with the theory of the tax burden, the writer focuses on the reform effects of tax burden on the telecommunications industry. The writer analyzes the impact of tax policy on the VAT reform to the telecommunications industry, the impact on the income statement of the telecommunications industry, and the impact on the telecommunications industry for different taxpayers. Through the theoretical research, the writer analyzes the China Unicom’s 2009-2013 financial statements to estimates the impacts on the VAT reform, and analyzes the data from 2009 to 2013 in different ways. The one is that telecommunications industry pays the tax before the reform, and the other is that telecommunications industry pays the tax after the reform. Then the writer selected indicators to estimate the tax burden impact on VAT reform of China Unicom.With the calculation and analysis, we draw the conclusions that the rate of VAT which the company needs to pay is between 0.1% and 0.2%, and the VAT which the company should pay is between 0.1% and 0.2% from 2009 to 2013 before the reform; and the rate of VAT which the company needs to pay is between 1% and 2% from 2009 to 2013 after the reform. And the writer put forward four policy recommendations at the end of the article, namely, to adjust the marketing model, to rationalize the cost structure, to accelerate the transformation and to enhance the level of tax administration.