The Research Of The Influence Of Vat Pilot Reform On Construction Companies

A new reform to make the switch from business tax(BT) to VAT(VAT pilot reform) has been introduced in China since 2012, which is an important measurement in the implementation of the structural tax reduction policy. Since the first pilot set up in Shanghai, it has been expanding to many industries, such as transportation, postal, telecom and certain modern service industries, and also it has a significant influence, no matter in the scope of the depth of reform and also in its breadth of expansion. In accordance with the overall arrangements of the State Council, this VAT pilot reform is set to be completed in the �Twelfth Five-Year Plan� period, with the purpose to fully replace BT with VAT.The construction industry, playing a decisive role in the economic development, is the only one still imposing BT in the second industry, and its complexity of current situation and taxation has been seriously hindered the healthy development of construction industry and the related ones. With the steadily carrying out of the VAT pilot reform, the switchover from BT to VAT in construction industry is clearly in order.Based on the collection and collation of 2013 annual financial data of the listing corporations, this paper analyses the influences on tax, financial and production management of construction industry after the switchover from BT to VAT from both theoretical and empirical perspectives, discusses the possible difficulties and problems, and finally gives some corresponding advices.As BT is the main tax burden for construction companies, the paper focuses mainly on the influences of circulation tax without considering the additional tax and maintenance. As for small-scale taxpayers, the tax burden falls 3%. As for the general taxpayers, assuming that the containing tax business income is constant, the analysis focuses on the change of tax burden considering the changing factors such as the deductible costs and the newly added fixed assets used in the production, and thus comes to the conclusion that the higher proportion the deductible items of the business costs, the lower the tax burden will be.