Research Of The Impact Of VAT On The NF Airlines

Over time, business tax has been levied upon an extensive range of industries, which severs the chain of VAT deduction and results in duplicated taxation. In contrast, VAT is collected only from the added value of goods or services, which helps eliminate duplicated taxation and reduce the tax burden on businesses. China has been proactive in its efforts to reform its tax collection mechanism, namely, from one based on business tax to a new mechanism centered around VAT, designed to facilitate structural tax cuts, to promote the development of secondary and tertiary industries, and to upgrade China’s industrial structure. China launched its VAT reform back in 2009, but fell short of a genuine shakeup. The reform only involved input tax deduction on purchased equipment and VAT rate adjustment for small taxpayers. And there was no specific or detailed reform program. In 2012, China re-launched the reform- “Switch from BT to VAT”, for which the guideline is to pilot the new mechanism among some selected industries in some areas, then extend it to selected industries in the whole country, and finally cover all industries in all parts of China. Opportunity refers to the aviation transportation industry can take this opportunity to optimize enterprise management mode, adjust the business structure of enterprises, ensure enterprise profit in the process of reform. Challenge is to show the enterprise made ample preparations at the beginning of the reform, even if will also face some problems, the enterprise will also seek experience in the groping. In the analysis of this article we will find that airlines is an important problem facing a large number of purchases fixed assets resulting in a decline in the profit of the enterprise, continuous falling profits will bring adverse effect to the enterprise. It is a huge advantage in terms of the development of the industry. As for the air transport sector, in particular, the new system provides a standardized tax collection mechanism which supports further development. “Switch from BT to VAT” incents businesses to invest in and upgrade their equipment and technology. It also encourages specialization and professional corporate tax management, helping optimize and upgrade the whole industry chain. On the other hand, the Switch has been implemented only for a short period and there is no valid historical data for reference. It is both an opportunity and a challenge for businesses to benefit from the new mechanism and for the Switch to become a positive factor in promoting business development. The paper will take this as a starting point to make a comprehensive analysis of the impact of the Switch on air transport industry. The study is based on an airline. And the methods used include case studies and comparative analysis. Based on a description of the air transport industry and tax mechanisms both before and after the Switch, the paper takes NF Airline as an analytical object to investigate the direct impact of the Switch on its tax burden. The paper further analyzes the causes for the impact, including the design of the tax system as well as the intrinsic factors of NF Airline. Finally, the paper proposes solutions for airlines to meet challenges brought upon by the Switch, make reasonable economic choices, optimize business processes, reduce taxes, and enhance the competitiveness by taking advantage of the switch.