Study On The Influential Factors And Countermeasures Of BT Reforming To VAT In Insurance Industry

Replacing business tax(BT)with value-added tax(VAT)is an importance measure for deepening fiscal and taxation reform as well as the supply-side structural reform.Since January 1,2012,the pilot program of replacing BT with VAT has started from the transportation industry and part of the service industry in Shanghai.To May 1,2016,the pilot program of replacing BT with VAT expanded its scope to all industries in the whole country——to cover all goods and services.The deduction chain of VAT is available.On the whole,this will help enterprises to reduce the tax burden and cost,promoting social division and industrial upgrading.According to the data released by the State Administration of Taxation,by the end of2015,the pilot program has reduced the government's tax revenue by more than RMB641.2 billion.It is expected to reduce the tax up to RMB 500 billion in 2016.The insurance industry is an important part of modern economy,and is also one of the last sectors to be covered in the pilot program.Taxation is one of the important factors that influence the supply and demand of insurance and the development of insurance industry.On the basis of theoretical research of domestic and foreign scholars as well as the practical experience of VAT in foreign insurance industry,this paper explains the necessity and significance of replacing BT with VAT in the insurance industry.Focusing on the analysis of the program of replacing BT with VAT and its impact on the insurance industry,this paper analyzes the main problem in the implementation process and gives the suggestions accordingly.Taking A life insurance company as a case,this paper estimates the impact of the program on the taxation burden and profit of the company,and sums up the practical experience and enlightenment of the company in financial management during the implementation of replacing BT with VAT.It's concluded that the reform of replacing BT with VAT has great influences to insurance industry in business operation,financial management and other many aspects.Though the tax rate increased from 5% to 6%,the taxation burden mainly depends on the management of the input VAT.From the analysis results of the case,we can see that although A company still enjoys the preferential tax policy of exemption of long-term life insurance tax,due to large taxable amount of investment incomes and lack of input VAT,the company suffers higher tax burden and lower profit.In response to these effects,on the one hand,the insurance company must adjust management strategy to improve financial management and control the tax risk;on the other hand,the government should release relevant rules and regulations for policies which are not yet clear as soon as possible.