The Research On The Legal Issues Of The Transition From Business Tax To Value-Added Tax

The Transition from Business Tax to Value-Added Tax means that the objects of business tax now should pay VAT instead of business tax.On 16,Nov.2011,China's Ministry of Finance and State Administration of Taxation jointly issued a business tax with VAT pilot program,which decided to carry out pilot project in Shanghai in 2012.The pilot sector would be transportation industry and part of the modern service industry.From then on,Railway Transportation and Postal service have been included.On May 1,2016,the Transition from Business Tax to Value-Added Tax was carried out in all sectors.Business tax,once one of China's main taxes,has disappeared in the historical stage.Business tax is different from VAT in scope of charge,object of taxation,taxation basis and tax rate.The most important characteristic of VAT is that it can avoid double taxation in the process of production and operation.The Transition from Business Tax to Value-Added Tax thoroughly implement the requirement of the third plenary session of the 18 th CPC central committee to deepen tax reform.It helped to perfect the tax system,avoid double taxation,improve the management process,improve the efficiency of tax collection and administration,adjust the industrial structure and improve the professional level of the industry.The Transition from Business Tax to Value-Added Tax has had a significant influence on enterprise tax burden and local tax system.After the transition,some enterprises would experience the rising of tax burden in the short period,but the whole industry would experience an obvious taxes reduce in the long term.The business tax has been replaced with VAT led to the relative reduce of the tax revenue of local governments and the loss of the main body of local taxation.As the history of the transition is too short,the task is so heavy and there have been lots of problems in tax legislation for a long time,China's Transition from Business Tax to Value-Added Tax still has many legal problems to solve.After the transition,there are five brackets of tax rate:17%,13%,11%,6% and 0%,which is a deviation from the principle of tax equity,the principle of tax efficiency and the principle of tax neutrality.The transition led to the loss of the main body of local taxation,the reduce of the total tax sharing of local governments and the imbalance of duty and financial power between the central and local governments.The concerning legislative documents of the transition are mostly issued in the form of “scheme” and “notification” by the Ministry of Finance and the State Administration of Taxation,which,from the point of legislative competence and legislative forms,deviates from the tax principle of legality.Based on the principle of tax equity,the principle of tax efficiency,the principle of tax neutrality and the requirement of internationalization of the VAT tax system,the VAT brackets should be reduced.In order to balance the duty and financial power between the central and local governments,the main body of local taxation should be confirmed and the transfer payment system should be improved.To further carry out the tax principle of legality,the tax principle of legality should be delineated in the Constitution,the level of legislation should be improved and the value-added tax law should be made.