A Study On The Influence Of "Replacing Of Business Tax With Value-added Tax" On Banking Tax Burden And Optimized Selection Of Tax Systems

Since the pilot range of the replacing Business Tax with Value-Added Tax(hereinafter referred to as "VAT Reform")in China has been expanded to the construction industry,real estate industry,financial industry and life service industry on May 1,2016,the collection of value-added taxes which replace business taxes levied previously in these sectors has been thoroughly implemented all over the country."VAT Reform"is not only an important strategic decision to deepen China's fiscal and taxation systems,but also a"booster"to promote the transformation and upgrading of industrial structure.Its full implementation has opened up a deduction chain between service industry and the secondary and tertiary industries,conducive to eliminating double taxation and reducing corporate taxation.In this sense,it is of great significance for creating a fair market competition environment and further improving fiscal and taxation systems.Since the"VAT Reform"has been fully implemented in the banking industry,only a few banks have reduced the tax burdens;but for most of banks and other financial institutions,their tax burdens have generally tended to increase.The "VAT Reform"in the banking industry has not achieved the purpose of fully reducing taxes or realizing the expected tax reform.Meanwhile,in its implementation process,some tax policies have still been considerably controversial;moreover,there have still been many options for how to further improve the VAT system.In this paper,the overview and review of tax changes in the banking industry after the"VAT Reform"are given first based on the related literature.And then,on the basis of theoretical basis of VAT and its taxation principle,a comparative analysis of the VAT collection model of financial industry as the international mainstream is conducted and its reference possibility is analyzed.In addition,by using two methods and from two perspectives(D Bank,11 branches and 17 listed banks),the empirical analysis of the impact of the"VAT Reform”on taxes of banking industry is conducted;moreover,it is concluded that,under the current VAT tax system,it is an inevitable phenomenon that the taxes of most banks have generally increased.Finally,these feasible proposals for reducing taxes and taxation costs of banks through deepening the tax reform are put forward:(1)Incor:porating input tax of corporate deposit interest expense into the deduction scope to maximize the principle of tax neutrality;(2)simplifying the conditions for tax concessions to effectively reduce the corporate taxes;(3)implementing a zero tax rate policy on exported financial services to improve the international competitiveness of the banking industry;(4)implementing a unified collection model for value-added taxes in the charge of the head office to improve the efficiency of collection and management;(5)fully promoting the use of electronic invoices for value-added taxes to reduce the enterprise's compliance costs.In addition,the innovations of this paper are mainly reflected in these two aspects.(1)The"loan-to-deposit ratio deduction method"is put forward for how to deduct the input tax for corporate deposit interest expenses;(2)For the tax return of VAT,the unified collection model in the charge of the head office is proposed;moreover,a special calculation method for the tax apportionment between the head office and the branches is provided.It is expected that the above-mentioned two points can provide some references for banking industry in further reducing the tax burdens and costs.