Influence on Taxpayer´s Financial Statements Of VAT Reform in China

Based on the tax burden, book value of fixed assets, depreciation, income and cash flow, this paper analyzes the influence on the taxpayer´s balance sheet, income statement, cash flow statement and statement of change in equity of the VAT reform in China. For the given amount of purchased fixed assets, the result shows that the VAT reform will reduce the tax burden, decrease the book value of fixed assets and depreciation, increase income, reserve surplus, undistributed profits and cash flow from operating activities, promote the enterprise competitiveness and enhance the fixed assets investment motivation of taxpayers. If the fixed assets investment increases sharply owing to the VAT reform, the more complicated characteristics of book value of fixed assets, income and cash flow would emerge.