Effects and Countermeasures of “Replacing Business Tax with VAT” to Real Estate Industry

As an important measure to deepen reform of the fiscal and taxation systems, “replacing business tax with Added-Value Tax (VAT)” pilot will be carried out in all industry across our country on 1st May 2016, the goal of the tax reformation is to have the Added-Value Tax (VAT) completely replace business tax, and to effectively avoid multiple taxation. The real estate industry, known as the foundation of national economy, will be greatly affected by the tax reformation. This paper discusses the impact of “replacing business tax with VAT” on the real estate industry’s tax burden, cost, house price, profit and cash flow. Finally, some suggestions on how to deal with tax reformation for the real estate industry are put forward.