The Realistic Choice of Replacing Business Tax with VAT in China's Financial Sector

It's a global problem to levy the standard VAT on financial services.Due to the infeasibility of credit input VAT by invoice,it is infeasible to build a standard VAT system in this field.If the government has to levy VAT on finance services,a practical choice is to adopt account book method,which is to levy the specified tax base through the account book by single-rate.Meanwhile,it is not allowed to credit input VAT in this method.This kind of VAT is in effect Business Tax.Because of government authorized monopoly,there is no so-called over-taxation in China's financial sector.As a result,the reform of Replacing Business Tax with VAT in finance should proceed without changing the original tax burden.After having conducted abundant research and statistical analyses,as for the VAT rate,9%is advised,and the original way of levying tax on the full amount of value is suggested to be supplanted with a new way of levying tax on added value,with a slightly raising tax ratio,to reduce the tax base.