Research On Tax Planning Strategy Of Modern Service Industry In The Reform Program To Replace The Business Tax With VAT

The reform program to replace the business tax with a value-added tax(VAT)is an important fiscal reform during the 12 th Five-Year Plan.On November 16 th 2011,the Ministry of Finance and State Administration of Taxation issued the Pilot Proposals for the Change from Business Tax to Value-Added Tax(Cai Shui [2011] No.110),which marks the beginning of the reform.The reform program to replace the business tax with a value-added tax is a milestone in tax system,while plays important roles in structural tax reductions.However,some industries suffer heavier tax burden than before during the reform process,which obeys the purpose of the reform program.This article introduces the issues occurred in the process of reform program on the basis of contract of business tax and VAT.By analyzing the operating features of modern service industry,it is conclude that tax burden of an enterprise depends on following factors:(1)high rate of labor costs lead to low intermediate inputs,which earns little input tax for deduction.(2)The ratio of deductible cost and the main business income is lower than 11.67%,the Tax Balance.(3)It's hard to get standard VAT invoices which meet the criterion of the tax authority.(4)Long replacement cycle of fixed assets means the enterprise cannot obtain large amounts input tax in a short period of time.With case analysis of BC hospital management Co.,Ltd,this article makes tax planning suggestions for enterprises in the process of reform program.First of all,in the aspect of tax policy,the tax preferential policies may evade tax for enterprises.The status of taxpayer may help in making more profit.Secondly,in the aspect of financial accounting,keeping separate accounting of sideline behaviors can avoid tax risk in a certain degree.Keeping separate accounting of deductible items and non-deductible according to relevant policies may save the cost for enterprises.Thirdly,in the aspect of business operation,proper adjustment can reduce tax burden in the reform program.For example,choose general taxpayers as suppliers,or reduce purchase costs and increase sales prices to increase profit,as well as obtain more input tax according to outsource services.Finally,improving the quality of managers,financial employees and purchasing staffs can take profit from the reform program.The purpose of above tax planning strategies is to reduce tax burden in the reform program to replace the business tax with a value-added tax in actual daily work,and to reverse the disadvantages of modern service enterprises in the reform program.