Abstract: VAT has applied to all service industries since MAY 1st, 2016. Because of the different revenue attribution schemes between VAT and Business tax, this reform may have complex impact on the intergovernmental fiscal relationship and the unitary national market. The next step of VAT reform should base on the fact that VAT is a general consumption tax. The intergovernmental fiscal system should switch from revenue sharing to tax base sharing. The revenue attributed to sub national and local government could collected by themselves in retailing process, and incents them to focus on public services rather than fixed assets investment.