Discussion On The Value-added Tax Reform Of Financial Industry

Since January 1, 2012,value-added tax reform first star in Shanghai,and transportation and some modern service industry are representatives of it.Until May 2015, China’s value-added tax reform extended to "3 + 7" industries, namely transportation, postal services, telecommunications and some modern services.It is not yet in financial industry.The current scope of VAT taxation is basically decided in the 1994 reform of tax, dating back over 20 years, had apparently no longer meet the demand of contemporary economic development, value-added tax in its fine principle, can effectively eliminate double taxation, reduce the corporate tax, more suitable for the development of financial industry, and it’s time to reform.This article based on this background, then conducted further analysis of the value-added tax reform of financial industry.Firstly, This paper describes the theoretics of the value-added tax reform of financial industry,and it contributes a lot to improve tax system, to show the principle of tax fairness and realize the importance of tax neutrality. The double taxation of the business tax affected the play of the tax regulation, while limiting the economic development, affecting the upgrading of industrial structure.The value-added tax reform of financial industry is not only conducive to China’s financial industry well-ordered development, but also affects the economic structure adjustment and upgrading of the tertiary industry. Secondly, This paper analyzes the weakness of current business tax which was mainly in double taxation and the internal and external issues such as unfair tax burden, while the financial sector has yet to implement the reform because of the main dilemma which is difficult to determining the tax factor, tax collection requirements and tax revenues attributable. Thirdly, through the analysis of the implementation of some of domestic industry reform and foreign financial industry levy pattern, the authors believe the pattern of Australia&Singapore is more suitable for our country,which is simple and in some extent to solve the double taxation and avoid the large loss of revenue. Finally, the fifth chapter is the core part, and it describes the reform should follow the principle of tax fairness, tax efficiency, fiscal revenue, and this paper focused on designs of the tax system, including taxation model, tax base, tax rates, tax collection. For tax rates, paper selected both banking and insurance industry, and take its main business for the object, for a simple quantitative analysis presented in the financial services industry in the applicable tax rate of 6% dominant, recessive business halved 6% tax rate applicable to conceive. The reform will face some problems about the revenue, this paper assumes that all industriesare levied VAT and the result shows that the ratio between central and local maint ain a substantially constant after the reform. The reform is obtained after the conclusion of the central and local governments should be split 50-50.