How do VAT reforms in the service sectors impact TFP in the manufacturing sector: Firm-level evidence from China

Peng, Fei; Peng, Langchuan; Wang, Zheng

doi:10.1016/j.econmod.2021.03.002

Cited by 32 publications

(9 citation statements)

References 54 publications

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“…Fang H et al [ 8 ] found that the replacement of business tax with value-added tax has significantly reduced the total tax burden of small-scale taxpayers, and there is no heterogeneity between the transportation industry and the modern service industry. Peng F et al [ 9 ] concluded that the business tax reform has a positive impact on the total factor productivity of manufacturing enterprises, and simplifying the tax system in different industries helps to improve the productivity of enterprises. Yu J, Qi Y [ 10 ] studied the impact of changing business tax to value-added tax on productivity.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Empirical study on the impact of tax reduction on the development of Chinese green energy industry

Cao,

Liu

2023

PLoS ONE

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The implementation of tax reduction policies in China represents a significant and effective strategy. Accordingly, this strategy has been designed to facilitate the development of a green economy by establishing a market-oriented allocation system for environmental and resource elements, while simultaneously invigorating microeconomic entities. As the nation navigates towards the adoption of green, low-carbon production, and lifestyles, the role of clean and green energy emerges as a vital necessity. Therefore, to explain the impact of tax reduction policies on the green energy industry, this study collected and compiled financial indicator data from 100 listed companies in the green energy sector, utilizing the China Stock Market Accounting Research database (CSMAR) as a source for research samples. A Panel Vector Auto Regression (PVAR) model was employed to observe the effects of tax reduction policies on the energy industry, while the dosage effects Difference in Difference (DID) model was utilized to verify and supplement the findings. In summary, the findings of this study can be summarized as follows: firstly, tax reduction policies exert a positive impact on the green energy industry by effectively mitigating the financial cost burden on green energy enterprises, thereby reducing production expenses and amplifying their profitability. Secondly, such policies bolster the capital turnover rate of enterprises in the short term, thereby enabling augmented research and development investments, refining production efficiency, and enhancing competitiveness. Through rigorous analysis and demonstration, the research findings accentuate the stimulative and propulsive impacts of tax reduction policies on the flourishing development of the green energy industry. Furthermore, this study provides relevant fiscal and tax policy recommendations, thoughtfully derived from the research findings.

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Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Empirical study on the impact of tax reduction on the development of Chinese green energy industry

Cao,

Liu

2023

PLoS ONE

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“…Not only firm capital but also productivity was reduced through the way of offsetting the tax liability with VAT paid on capital inputs by India’s replacement of the sales tax with VAT [ 6 ]. A positive relationship was found between a pilot policy of replacing the business tax (BT) with a value-added tax(VAT) and manufacturing firms’ total factor productivity (TFP) [ 7 ].…”

Section: Literature Reviewmentioning

confidence: 99%

China’s value-added tax policy and intertemporal optimal assets allocation of enterprises——Based on the dual perspectives of VAT input refund and VAT rate

Liu

2023

PLoS ONE

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The article sought to detect the impact of the value-added tax (VAT) policy on the enterprises’ asset allocation from the dual perspectives of the VAT input refund and the VAT rate. Based on the influenced mechanism of the VAT input refund and the tax burden effect (and the price effect) caused by the VAT rate, enterprises’ intertemporal optimal asset allocation models are constructed under the states of adopting the VAT input refund and maintaining the theoretical tax (non-)neutrality of VAT. When VAT rates of the general taxpayers are predicted to be reduced, we also use China’s manufacturing and economic data to simulate specific cases to verify propositions under different states. The results show that: (1) When the VAT output tax rate decreases: if returns to scale are diminishing, enterprises will increase the number of productive material assets and labor and reduce financial assets. (2) When the VAT input tax rate reduces: under the state of adopting the VAT input refund and maintaining the theoretical tax (non-)neutrality of VAT, if returns to scale are decreasing, enterprises will reduce the number of productive material assets and labor and increase financial assets. Under the state of adopting the VAT input refund and maintaining the theoretical tax neutrality of VAT, if returns to scale are increasing and the expected rate of return of financial assets is lower than the additional tax rate, or the enterprise has diminishing returns to scale and the expected rate of return of financial assets is higher than the additional tax rate, enterprises will increase the number of productive material assets and labor. (3) When VAT output and input tax rates reduce simultaneously: under the state of adopting the VAT input refund and maintaining the theoretical tax neutrality of VAT, if returns to scale are increasing and the expected return rate of financial assets is higher than the additional tax rate, the enterprise will reduce the number of productive material assets and labor and increase financial assets. Under the diminishing returns to scale in China’s national economy, the research conclusions endorse the rational necessity of the VAT policy change—VAT rate reduction to develop the entity economy and provide a reference for enterprises to make asset allocation decisions. The conclusions also provide possible changes in VAT policy for different countries according to their actual economic conditions.

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“…Peng et al [21] studied the impact of China's VAT pilot on the total factor productivity of manufacturing enterprises and proved that it has a greater impact on non-state-owned enterprises and labor-intensive enterprises.…”

Section: Literature Reviewmentioning

confidence: 99%

Analyze the impact of the transition from business tax to VAT on the tax burden of transport enterprises in various regions of China

Ma¹,

Leontyeva²,

Domnikov³

2022

JTR

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In recent years, the transportation industry has enjoyed the benefits brought about by changes in the national tax policy. The purpose of this paper is to analyze the impact of the change from Business Tax to Value-Added Tax (BT-to-VAT) on the tax burden of transport enterprises in various regions of China. Based on the cross-regional characteristics of the transportation industry, China is divided into four regions: eastern, central, western and northeast. Research hypothesis – the tax reduction effect of the BT-to-VAT tax burden is not only related to the characteristics of the enterprise itself, but also related to the regional environment and market integration factors of China. Using the Difference in differences (DID) method, the data covers 22 listed companies from 2009 to 2020. The paper analyzes the internal characteristics of the enterprise itself, the influence of the external environment and the degree of industrial integration on the enterprise, and the reasons for the difference. Empirical research shows that BT-to-VAT reduces the tax burden of enterprises, the eastern region has the least impact on the ratio of corporate income tax expenses to operating income, while the central and western regions have relatively greater impacts. The scale of the enterprise and the level of economic development have a positive effect on the financial efficiency of the enterprise, while the non-current assets ratio and the degree of market integration have a negative effect on the tax burden. This research is beneficial to provide reference for enterprises in different regions to improve their management and to formulate macro policies by relevant national departments.

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How do VAT reforms in the service sectors impact TFP in the manufacturing sector: Firm-level evidence from China

Cited by 32 publications

References 54 publications

Empirical study on the impact of tax reduction on the development of Chinese green energy industry

Empirical study on the impact of tax reduction on the development of Chinese green energy industry

China’s value-added tax policy and intertemporal optimal assets allocation of enterprises——Based on the dual perspectives of VAT input refund and VAT rate

Analyze the impact of the transition from business tax to VAT on the tax burden of transport enterprises in various regions of China

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