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

Cao Yue（曹越） and Li Jing（李晶）

Business School, Hunan University, Changshang, China
Abstract: 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.
Keywords: BT-to-VAT reform, turnover tax, effects on tax burden
JEL Classification: E62, H25, H71

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