An Empirical Analysis On The Effect Of Anti-corruption Campaign And Tax Reform Of "Replacing The BT With The Vat" On Corporate Tax

Corporate income tax as an important part of business costs,will affect the production and operation.In recent years,the Chinese government is constantly carrying out a structural tax reduction and launching the tax reform of “replacing the BT with the VAT”,the reform of “replacing the BT with the VAT” started to be fully implemented in our country until May 1,2016.The purpose of the tax reform is to promote social division of labor,balance the tax gap between industries,improve the tax structure and reduce the loss of benefits caused by multiple tax rates.The tax reform of “replacing the BT with a VAT” is an inevitable choice for the continuous improvement of China's marketization level and the continuous development of the service industry.It is a tax structure adjustment to avoid duplication of taxation and better release the market vitality,which is a further improvement of the 1994 tax reform.“Replacing the BT with the VAT” tax reform will have a direct impact on corporate tax burden.China has stepped up efforts to combat corruptions since the “18th National Congress of the Communist Party of China”.With the government's simplicity and decentralization,the construction of the party's clean and honest government has also had a profound influence on the operation of the economy.The corporate tax burden is also affected by the institutional environment.The impact of the institutional environment on the corporate tax burden is mainly reflected in whether enterprises can obtain more tax incentives and whether the enterprises bear informal tax burden.Corruption as an illegal political connection,companies pay the government “rent-seeking fees” is equivalent to the informal tax burden of corporation.Anti-corruption has improved the institutional environment,reduced the correlation between businesses and the government,and thus reduced the informal tax burden of corporation.Both Anti-corruption Campaign and “replacing the BT with the VAT” tax reform are important measures to deepen the overall reform since the “18th National Congress of the Communist Party of China”.Against this background,this paper sorts out the related documents of the anti-corruption and the “replacing the BT with the VAT” tax reform,and combines the theory of rent-seeking,information asymmetry theory,optimal tax theory and neutral tax theory to analyze the impact of the two policies on corporate tax burden.This paper takes the listed companies from 2010 to 2016 as a sample to study the impact of anti-corruption campaign and “replacing the BT with the VAT” tax reform on corporate tax burden.The results show that:(1)The tax reform of “replacing the BT with the VAT” has a significant effect on the tax reduction of enterprises.“Replacing the BT with the VAT” tax reform reduce the tax burden of listed companies in totally.(2)Anti-corruption campaign has reduced the tax burden of enterprises,mainly because of anti-corruption campaign,which has reduced the cost of rent-seeking and reduced the tax burden of enterprises.In addition,the paper examines the combined effect of anti-corruption campaign and “replacing the BT with the VAT” tax reform of the corporate tax burden.The results show that under the joint action of the two kinds of policies,there is no direct impact on corporate tax burden.Further analysis,anti-corruption campaign to tax reduction effect of “Replacing the BT with the VAT” is obvious in the lower marketization level areas,but this effect does not exist in the higher marketization level areas.It is shows that anti-corruption campaign is conducive to improving the institutional environment and promoting Implementation of “Replacing the BT with the VAT” Tax Reform.