An investigation into the replacement of VAT for CIT in non-producing companies

The present research aims at exploring the impacts of replacing VAT for company income tax (CIT) in non-producing companies of Golestan Province. To this end, the taxable income of a sample of 283 companies was extracted and the valueadded of each company was estimated through the accumulative method bearing in mind four rates of 1.5, 3, 7, and 10. Since the research data was not normal, we have made use of non-Parametric Wilcoxon Test and Friedman Test. The findings indicate that the replacement of VAT (with rates of 1.5, and 3) for CIT in nonproducing companies will result in a decrease in the provincial tax revenues while the replacement of CIT with two VAT rates of 7 and 10 will lead to an increase in tax revenues. So, if the government decides to substitute the modern, revenue generating and transparent system of VAT for the current system of CIT, it is recommended to use VAT rates of 7 and 10, the latter being internationally supported.