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From Business Tax to Value‐added Tax: The Effects of Reform on Chinese Transport Industry Firms

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  • Haifeng Huang
  • Tao Wang
  • Zhichao Zhan

Abstract

We study the effects of switching from business tax (BT) to value‐added tax (VAT) on the performance of firms in the Chinese transport industry, in an effort to determine whether the change in policy improves firm performance. We study the effects of this new VAT reform from a theoretical perspective, and test the effects on 49 listed transportation firms using a difference‐in‐differences model. The results indicate that VAT reform has a positive effect on profitability and the growth ability of firms in the transport industry, but no significant effects on the debt‐paying ability and operating capability of firms are found. Furthermore, we propose some suggestions for speeding up the development of transportation firms by replacing BT with VAT.

Suggested Citation

  • Haifeng Huang & Tao Wang & Zhichao Zhan, 2019. "From Business Tax to Value‐added Tax: The Effects of Reform on Chinese Transport Industry Firms," Australian Accounting Review, CPA Australia, vol. 29(1), pages 158-176, March.
    • Handle: RePEc:bla:ausact:v:29:y:2019:i:1:p:158-176
    DOI: 10.1111/auar.12248
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    Cited by:

    1. Feng Huang & Jie Gao, 2022. "Customer and Tax Avoidance: How Does Customer Geographic Proximity Affect a Supplier’s Tax Avoidance?," Sustainability, MDPI, vol. 14(22), pages 1-30, November.
    2. Jie Qin & Kaili Yang & Xuhui Ding, 2023. "Can the Reform of the Transfer Tax System Affect Corporate Green Innovation—Evidence from China’s “BT to VAT” Reform," Sustainability, MDPI, vol. 15(4), pages 1-14, February.
    3. Kong, Dongmin & Xiong, Mengxu & Qin, Ni, 2022. "Business Tax reform and CSR engagement: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 82(C).
    4. Neba Bhalla & Rakesh Kumar Sharma & Inderjit Kaur, 2022. "Effect of Tax Knowledge and Technological Shift in Tax System on Business Performance: A PLS-SEM Analysis," Sustainability, MDPI, vol. 14(16), pages 1-18, August.
    5. Zhou, Di & Qiu, Yuan & Wang, Mingzhe, 2021. "Does environmental regulation promote enterprise profitability? Evidence from the implementation of China's newly revised Environmental Protection Law," Economic Modelling, Elsevier, vol. 102(C).
    6. Tu, Yongmei & Liu, Tianbao, 2022. "Tax cuts and firms’ R&D capital efficiency," Finance Research Letters, Elsevier, vol. 49(C).

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