Abstract: To alleviate financial sustainability crisis of the pension security system, some developed countries have implemented the social security VAT reform, i.e. imposing VAT on social security instead of pension insurance contributions. Taking Germany, Japan and France as examples, the paper introduces the experiences of the social security VAT reform in these countries. Based on China’s practical situation, the paper makes a qualitative analysis on the application of the social security VAT to China. It is concluded that though the reform may have some negative influences, financial sustainability crisis of the pension security system can be alleviated, industry international competitiveness can be strengthened and the economic structure can be improved through the reform.
