Analysis Of Taxation Effect On Logistics Services Industry

The taxation reform (to replace BT with VAT) continues with expansion of itsscope. Initially from traffic transportation industry and “6+1” mode of modern serviceindustry, it now involves postal service industry, telecom industry and culturalindustry. The reform of taxation system of GST is acceleration with significant impacton different industries of China with different result. The express service industryinvolves long value chain and multi industry with high degree of specialization. As aresult, the taxation reform may have significant impact on this industry in terms oflevel of tax cost accordingly.In this paper, it attempts to analyze the impact of the reform of taxation system onthe real enterprise–S group with statistical method, based on the financial report2011-2014of S group.In August2013, the pilot reform was carried out by State Administration ofTaxation in courier service business and eventually it was extended to nationwide inJanuary1st,2014. It brought a lot of concerns of increasing tax cost on enterprises ofChina. However, after thorough analysis, surprisingly it shows that the tax cost ofVAT (2%-2.5%) is lower than the tax cost of BT after taxation reform. If we assumethe nominal tax rate goes up to11%, the actual VAT tax cost rate is still far less thanthe nominal tax cost rate. Meanwhile, it is closer to nominal tax cost rate under initialrate of6%. Based on the comprehensive analysis of the company financial status andbusiness operation, it implies that company is tolerant with the increase of nominaltax rate as the tax cost remains stable.However, there are still a lot of challenges facing the tax system reform. Forexample, the taxation scope is unclear and misleading. Same business could becategorized into two different industries due to the different nature of the company.Besides, tier rate of taxation is complex and tax deduction interval might not bereasonable. This paper attempts to bring about suggestions and recommendationsupon taxation reform with qualitative analysis, based on the study of relevantliterature and international practice.