According to the Intelligent Finance and Economics APP, Dongbei Securities stated in its research report that the current financial and tax situation in China mainly faces three problems: growth, structure, and supervision. The expected focus of the new round of financial and tax system reform will include the following three aspects: improving the tax system to maintain financial revenue stability, reforming the financial distribution system to stimulate local vitality, enhancing budget transparency to improve efficiency and supervision. Financial and tax informationization reform is intertwined with each stage of financial and tax system reform and synchronously promotes them. New investment opportunities for financial and tax informationization include two directions: the construction of an electronic accounting voucher system, and the application of financial and tax big data and AI.

Each financial and tax reform has a specific historical background and responds to specific problems of the times. The fiscal contracting system reform that began in 1978 activated the economy by granting power and profit, and unprecedentedly improved the vitality of enterprises and the financial strength of local governments; the tax-sharing system reform in 1994 reshaped the fiscal relationship between the central and local governments and increased the proportion of central fiscal revenue; China began to establish a basic framework for public finance in 2003 and improved the supervisory system; since 2013, the comprehensive implementation of the VAT reform shifted the focus to improving the budget management system and turning to digital finance.

The current financial and tax situation in China mainly faces three problems: growth, structure, and supervision. The growth rate of fiscal revenue is decreasing and is lower than the nominal GDP growth rate; the matching of local authority and financial power is not balanced, and the debt ratio continues to rise; and there is insufficient tax collection and loss of revenue. To solve these three problems, Dongbei Securities predicts that the focus of the new round of financial and tax system reform will include the following three aspects: improving the tax system to maintain financial revenue stability, reforming the financial distribution system to stimulate local vitality, enhancing budget transparency to improve efficiency and supervision. Measures to be taken include: strengthening the tax on individual capital gains, gradually levying property taxes, establishing local tax categories, such as shifting the consumption tax to the later stage, and changing taxes from central to central and local shared taxes. Deepen the reform of the budget management system, and use information technology to strengthen financial internal control construction.

Financial and tax informatization transformation runs through various stages of financial and tax system reform, which are carried out synchronously and promote each other. The finance side relies on the Golden Finance project and the integration platform of budget management to effectively achieve strict supervision of financial expenditure and precise subsidy allocation in the field of people's livelihoods. By now, it has entered the 2.0 stage, adding asset management, budget index accounting modules, and upgrading previous modules. The taxation side uses the Golden Tax project phases 1 to 4 to achieve refined collection and supervision. The Golden Tax project construction that began in 1994 was initially developed specifically to manage the VAT invoice. After four stages of development, it was continuously upgraded and iterated from "invoice control tax" to "information management tax" to "number-controlled tax", and it has now formed a new tax governance system driven by data.

The current new round of financial and tax system reform has put forward higher requirements for the development of financial and tax informationization, which provides new investment opportunities for financial and tax informationization, including two directions: the construction of an electronic accounting voucher system, and the application of financial and tax big data and AI. The key to the electronic accounting voucher reform is to standardize multiple invoice data formats, which will lay the foundation for future data applications and is an important lever for financial and tax reform. It can improve budget units and corporate financial management efficiency, and enhance compliance supervision. The current policy promotion has begun to accelerate, and it is the general trend to promote it comprehensively. In terms of budget units, it is expected that each unit's annual SaaS service fee will be approximately 0.015 million yuan, and the market space will be approximately 10.5 billion yuan per year. In terms of the enterprise market, the market space is about 82.6 billion yuan per year. The deepening of digital processes such as Golden Tax Phase 4 and electronic accounting vouchers lays the foundation for financial and tax big data and AI applications. Financial and tax big data provides logical support for government revenue and expenditure budgets, government procurement, government debt, tax policies, asset management, performance evaluation, etc. The central government and many local governments have begun to build in the field of "digital government." AI helps the government to discover tax fraud and financial revenue and expenditure problems, enables companies to generate financial statements intelligently, and provides tax analysis for individuals. Dongbei Securities believes that the budget unit side, due to the more direct and rapid policy guidance, will first bring performance growth to related service providers. The demand for the enterprise side is weaker due to policy stimulation, but there are about 50 million companies nationwide, and the market space is broader.

Related companies:

The market for budget units: Fujian Boss Software Corp., ZKJN Co., Ltd.

The market for enterprise: Shenzhen Taxsutra Technology Co., Ltd., JC Finance & Tax Interconnect, Aisino Co. Ltd., Yonyou Network Technology Co. Ltd., Kingdee International Software Group Co., Ltd., Inspur Digi Ent Co. Ltd., China National Software & Service Co. Ltd.

Risk reminder: the progress of financial and tax reform is not as expected, and financial and tax informatization expenditure is less than expected.