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Web of Proceedings - Francis Academic Press

Value-Added Tax and China’s Recent Reform

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DOI: 10.25236/assah.2021.033


Elaine Zhou

Corresponding Author

Elaine Zhou


To a great extent, the history of a modern country is its economic history and financial history. In 1994, with the overall transition to market economy, the tax system has been improved to adapt to the rapid growth of domestic and international trade. In the second part, this paper will first summarize the value-added tax and compare its current situation in OECD region and China. Then, in the third section, it discusses the theoretical and empirical impact of VAT reform on economy, and puts forward further suggestions in the fourth section. After four years of experimentation, the new VAT policy in May 2016 shifted the last two-thirds of China's total revenue to VAT. It has been found that the pilot projects in previous years are helpful to promote economic growth and increase the share of tertiary industry in the whole economy. It is reasonable to expect that the latest reform will help this country in a similar way. In view of the large-scale reform in 2016, the current situation of this research field will definitely change, because more data will be available in the next few years.


Vat reform, Economic growth, Tertiary industry, Taxation system