Tax Effect Of The Reform Program To Replace Business Tax With Value-added Tax In Financial Industry

Since May 1,2016,China's financial industry,construction industry,real estate industry and life service industry have all been included in the pilot scope of"replacing the business tax with a value-added tax".Since then,VAT has fully covered the production,circulation and consumption of all goods and services.The financial industry covers production,distribution,exchange,consumption and other areas of the national economy,and plays an important role in the normal operation of enterprises and the entire national economy.The financial industry is included to eliminate double taxation,reduce the tax burden of the financial industry,and promote financial innovation and healthy development.In addition,it also helps to improve some unreasonable points in the business tax policy of the financial industry.At the same time,it can improve the VAT deduction chain,reduce the cost of tax payment for the whole social and economic development,and improve economic efficiency.In this paper,based on the principle of value-added tax(VAT)transfer and deduction,combined with the comprehensive VAT policy provisions for the financial industry after the "replacement of the business tax with a value-added tax",the impact of the "replacement of the business tax with a value-added tax" on the financial industry as a whole as well as the three subsectors of banking,securities and insurance is theoretically analyzed.In addition,116 listed and unlisted financial enterprises'annual panel data from 2014 to 2017 were used for empirical research to investigate the tax bearing effect of the financial industry's "replacing business tax with value-added tax"program.It is found that the reform of the financial industry has no significant tax reduction effect on the financial industry as a whole,but it has different effects in the three subsectors of banking,securities and insurance.Deductible input tax and tax-free income will affect the tax burden effect of the "replacement of business tax with value-added tax" of the financial industry.