Effects of China's BT-to-VAT Reform on Listed Companies' Turnover Tax Burden

Using the data of China's listed companies during 2010-2014 as samples, this paper employs the PSM and DID methods to respectively investigate the effects of BTto-VAT reform on the turnover tax burden for companies in pilot regions(Shanghai and eight other provinces and municipalities) and the rest of China. Our study arrived at the following findings: Compared with pilot sectors in non-pilot regions, BT-to-VAT reform has no significant effect on the turnover tax burden of pilot companies in pilot regions; compared with non-pilot companies, BT-to-VAT reform slightly increased the turnover tax burden in the short run and somewhat reduced the turnover tax burden for pilot companies in the long run. Further differentiation of ownership nature led to the discovery that BT-toVAT reform somewhat reduced the turnover tax burden of SOEs and central SOEs, slightly increased the turnover tax burden for non-SOEs and local SOEs in pilot regions, slightly increased the turnover tax burden in the short run and somewhat reduced the turnover tax burden in the long run after nationwide pilot programs were introduced; BT-to-VAT reform has more significant effects on non-SOEs and local SOEs. In general, BT-to-VAT reform has no significant effects on the turnover tax burden of companies and after differentiating pilot regions, pilot sectors and ownership nature, we did not discover any significant effect, which is generally consistent with policy expectations.

Value-Added Tax(VAT)Development and Reform History—A Study of VAT Evolution Around the World and in China

Value-added Tax(VAT),a turnover tax levied on the value appreciated in commodities production,circulation and sale,has been widely practiced by economies worldwide for its neutrality.From the international perspective,European Union VAT and New Zealand VAT stand out as characteristic models of VAT development and reform history.With changing economic development models and the growth of e-commerce businesses,VAT systems have been upgraded to meet taxation challenges brought about by the digital economy.Recently,VAT policies and measures have been introduced particularly to combat the COVID-19 impact.In China,the VAT system has been reformed constantly over the past 40 years and has been converging with international practice.China now needs to address emerging VAT issues through legislation,tax incentives,and tax-rate grades so as to meet challenges in VAT collection and management and to suit the“new normal”of economic development.