The Research on the Insurance Industry’s Tax Burden in China under the Background of Change from Business Tax to VAT

Abstract

The insurance industry plays a key role in the national economy and modern society. The tax policy has a wide range of influences on the development of the insurance industry and the tax burden is the core of tax policy, which is directly related to the business performance and the balance of the insurance market. This paper estimates insurance companies' effective tax rate of business tax and income tax by selecting insurance companies' financial statement data from 2008 to 2015. We can see that the effective tax rate of insurance industry is facing a heavy tax burden especially for property insurance industry. By studying these problems, we should pay more attention to the tax burden on the insurance companies in the implementation of value-added tax in order to achieve the basic goal about change from business tax to VAT that does not increase but decreases slightly the tax burden and eliminates the double taxation. We also should solve the problems and challenges of insurance companies, facing change from business Tax to VAT, thus promoting the development of the insurance industry and enhancing its international competitiveness. standard of social civilization, economic development and social governance. In 1980, there was only one in-service insurance company in China. And there were 165 insurance companies with premium income reaching 3.1 trillion yuan by the end of 2016. The size of the insurance market surpassed Germany, France and Britain with ranking third in the world in 2016. However, the density and depth of world average insurance in 2016 were 1.89 and 1.51 times that of China. Most insurance companies have large fluctuations in their profit margins, and the overall cost ratio for premium business is more than 80%. The industry's profit margin is relatively low. Tax policy is an important means of regulation and the most direct impact of policy changes is reflected in the tax burden. A reasonable tax burden not only promotes the development of insurance companies, but also promotes the development of the country's economy. This article analyzes the tax burden of the insurance industry when the Chinese insurance industry begins to be collected in VAT, and combines the problems faced by insurance companies to provide ideas for the further expansion of China's insurance industry taxation policy, so that the reform of the insurance's business tax system is more in line with the needs of the national economy and the development of the industry, and can improve the level of development of the insurance industry and the level of international competitiveness. The greatest contribution of this paper is to divide insurance companies into different scales and operating characteristics to measure and compare the tax burden. The article data is true and reliable. However, this article does not carry out empirical regression. The article is organized as follows: firstly, sort out domestic and foreign literature from the aspects of the tax system, the tax burden measurement, the impact of tax burden and the impa...

China's nonlife insurance market: New insights from the China Insurance Yearbook

“…The CIY has the potential to support several policy-relevant research topics. Those that have already received notable attention include firm efficiency (Huang & Paradi, 2011;Yao et al, 2007), insurance market development (Barrese et al, 2016;Sun et al, 2007;Wu et al, 2005;Zhu et al, 2011), regulation (Chen et al, 2014), underwriting cycles (Zhang & Tang, 2012), agricultural insurance decision making (Liu et al, 2016), corporate insurance (Zhu et al, 2011), insurer tax burdens (Chen, 2018), and China's entry into the World Trade Organization (Chen & Lai, 2011;D'Arcy & Xia, 2003). 3 These studies showcase the breadth and viability of CIY data.…”