Research On Replacement Of Business Tax By Vat And Tax Changes On Nterprises

In order to solve the problem of double taxation and reflect the principle of Tax fairness,business tax has been replaced by VAT (added-value tax) from January1,2012. The reformcarries out in transportation and modern service in Shanghai firstly. This paper aims atsummarizing the problems on the "expanding scope" reform, estimating changes in the taxburden and making some recommendations accordingly.First of all, the paper discusses fairness of business tax and VAT and the necessity of"expanding scope" reform on the basis of the principle of Tax fairness. The overview sinceimplementation of the reform is reviewed and then the problems are summed up based on theabove.Secondly,“Industry boundaries” is being forward because of the positive and negativeeffects of the reform. The paper selects and analyses the industries in the scope of this reformwith some principles. Based on investigating deductible costs and investment of fixed assets ofvarious industries, some listed companies are selected as the empirical analysis samples.Describing changes in the tax burden of transportation and telecommunications from2010to2012with financial reports, the result shows that some companies does present thephenomenon of tax increase after imposing VAT. Although continue to expand might alsohave some negative effects, the consequent of expanding is positive for the industry as a whole.At last, combining with the result of empirical analysis, the corresponding suggestions forthe reform are putting forward.