Does “Replacing Business Tax with VAT” Promote the Integrated Development of Manufacturing and Service industries? An Empirical Study of Listed Companies in China
DOI:
https://doi.org/10.54097/hbem.v20i.12333Keywords:
Difference in difference regression model, Manufacturing industries, Service industries, Integrated development.Abstract
The reform of replacing business tax with value-added tax (referred to as “Replacing Business Tax with VAT”) in some service industries in 2012 was placed high hopes on by the society. What is the effect of the reform? According to the mean comparison analysis and Difference in Difference regression model analysis of the financial data of 582 listed Chinese companies, “Replacing Business Tax with VAT” not only had a positive impact on the related service industry, but also had the same positive impact on the manufacturing industry. “Replacing Business Tax with VAT” has changed the expectations of these industries for the future, made their expectations more positive, and promoted fixed asset investment and intangible asset investment in manufacturing and related service industries. However, “Replacing Business Tax with VAT” does not immediately improve the operating performance of manufacturing and related service industries as most people thought, and even in the early years, these industries showed some degrees of declining in profit-earning indicators.
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