The Impact Of Business Tax Into VAT On The Tax Burden Of China’s Air Transport Industry

Taxation is an important tool for the government to raise financial capital and macroeconomic regulation. And an ideal taxation adheres to the tax neutrality and Keeps an extra tax burden of zero. In other words, in this process, try to avoid distorting the economic behavior of taxpayers while keep the additional revenue minimized. Countries in the world including China has been committed to the development of ideal taxation, But the phenomenon contrary to the principle of tax neutrality exists in our tax system. For example, business tax is levied by the full revenue and causes double taxation. In the background, not only there is a serious double taxation, further affecting the professional development of enterprises, but also it undermines the VAT deduction chain, making VAT taxpayers not get a VAT invoice from the business taxpayers and the VAT invoice which business taxpayers get from VAT taxpayers can not be used.On January 1,2012, there is a policy of "Business Tax into VAT" to start. It adheres to the principle of tax neutrality and optimize our tax system, and also be one important means of structural tax reduction. The air transport industry, as one of transportation industry which is in the policy of "Business Tax into VAT", has its own peculiarities. Judging from the change in the tax rate, you will find the air transport enterprise used the business tax rate of 3%, and now use the VAT rate of 11%. This change may lead to the effect of tax increases. But after the change, the VAT from the cost of part of the business and aircraft and other fixed assets can be deducted. This change has played a role in tax reduction. With these two factors, it is difficult to visually determine whether this policy is tax reduction for the air transport enterprise. It decides that this study estimates the impact of tax burdens on air transport by microscopic calculation method, and to further test by macroscopic method. Meanwhile, this study compares the VAT tax levels between China and Netherlands, Luxembourg, Belgium and Germany by macroscopic method, and finally I make recommendations.From the results of this study, regardless of the method is micro-or macro approach, the results are tax reduction to the air transport enterprise. Mainly due to the following:first, China has adopted a zero rate of VAT tax on international air transport operations and Hong Kong, Macao and Taiwan air transport operations; second, because of the costs of its aircraft maintenance, high fuel, operating leases and so on, the corresponding input VAT is much; third, the annual increasing fixed assets are more, such as aircraft and so on, the corresponding input VAT also is more. In addition, when comparing China with the Netherlands, Luxembourg, Belgium, Germany by the VAT tax level, the level of Chinese VAT burden on the air transport industry is relatively highest, and further tax incentives are necessary to reduce their tax burden. Finally, I also advise on enterprises and taxation policy based on the results.