Abstract: the transformation and reform of value-added tax has realized the transformation from production-oriented value-added tax to consumption-oriented value-added tax, and brought preferential policy dividends to enterprises. Clarifying the internal mechanism of the economic effect of value-added tax transformation on enterprises is of great significance to understand the economic effect of China's value-added tax transformation policy and further reform the tax policy in the future. Based on the database of Chinese industrial enterprises from 1998 to 2007, the revised enterprise cost plus is estimated by semi parametric ACF method. The research using propensity matching score and double difference method shows that the transformation reform of value-added tax has significantly improved the enterprise cost plus; Considering the sample selection error, the calculation method of replacement cost plus and the placebo test results all confirmed the robustness of the regression results; Mechanism analysis shows that the transformation and reform of value-added tax has promoted the increase of cost plus by reducing production costs and increasing industrial added value.

Key words: VAT transformation, cost plus, semi parametric estimation, PSM-DID