Beplacing Business Tax With VAT Reform: A Study Of Effects On China’s Logistics Industry

The work of replacing business tax with value-added tax reform, starting firstly in Shanghai, has been achieved nationwide since 2014. One of the intentions of the reform is to alleviate tax burden faced by the logistics industry. However, some corporates’ tax burdens have inversely been aggravated during the policy proceeding. To study the real effects of the reform on logistics industry, analyze the problems exposed and provide with suggestions, can not only promote the reform implementation, but also benefits the industry.From perspectives of accounting, macro-data interpretation and modelling as well, the paper studies whether VAT reform plays an expected role for logistics enterprises. What’s highlighted is that we apply the prevailing Difference in Difference method. Our results show that in theory, the reform definitely will relieve burdens of small-scale taxpayers but the impacts on the general depends. The empirical test reveals that turnover tax and total tax burden has declined significantly since reform. But corporate performance seems not to be affected. The reason might be that the reform will influence other types of tax, that tax shield effect and size effect hedge the reform’s effect and also that the correlation between tax burden and performance isn’t linear.Eventually, the paper discusses the obstacles in the way, including tax burden increase, inappropriate tax collection, and discrepancy in tax rates, and give suggestions accordingly.