Research On The Impact Of Transformation From Business Tax To Value-added Tax On Corporate Finance

Transformation from business tax to VAT was first carried out in Shanghai transportation industry and parts of modern service industry on January 1,2012. Since then, cargo and services tax system reform has started. The pilot area has been expanded to the whole country since August 1,2013. As of June 1,2014, the pilot industry has also been extended to the transportation industry, parts of modern service industry and postal telecommunications industry. This reform is an important part of our structural tax cuts. It has important practical significance in eliminating double taxation of business tax, getting through the deduction chain of VAT and reducing the tax burden on pilot industry. In the long run, the reform can promote enterprises’ specialization, transform from "big but all" into "small but good", and realize the integration of manufacturing and service industry. Then it can facilitate the optimization and upgrading of industrial structure and finally promote the qualitative development of the third industry in our country.Transformation from business tax to VAT is a tax policy, and VAT and business tax is different, so its implementation is bound to influence financial aspects of enterprises. Its implementation principle is "maintaining the pilot industry overall tax unchanged or slightly down". But in the process of implementation, whether the reform has indeed brought positive influence to the enterprises so as to realize the purpose of the policy is worth our discussing and studying.The paper learned from the predecessors’ good experience, was based on the perspective of micro enterprises and adopted the method of empirical test to examine the effect of the reform. The paper firstly introduced related theory on transformation from business tax to VAT, on this basis, theoretically analyzed the effects of this reform on tax burden of enterprises, investment in fixed assets and operating performance. Then, the paper took public companies in the partial provinces and cities in the early stage of the pilot industry as samples and put forward the research hypothesis. Using the methods of descriptive statistical analysis, the significance test and regression analysis, we tested the effects of this reform on the turnover tax burden, income tax burden, investment in fixed assets and operating performance. Finally we concluded, that after the reform, there was a marked increase in transportation industry and a slow decline in modern service in turnover tax burden; the effect of the reform on income tax burden of the transportation and modern service industry was not significant; in the short term the reform did not cause the increase of fixed asset investment and this difference was not significant; the reform caused enterprises’ operating performance to drop significantly. Based on the detailed analysis of possible reasons for the above phenomena, finally related suggestions based on the above reasons were given, as well as to provide some beneficial enlightenment for the taxpayers in pilot industry in the future.