Abstract: Replacing business tax with value added tax (VAT) has been the most important tax reform in China in recent years. The construction industry is the pillar industry in our national economy. It is of great significance whether the replacing business tax with VAT in the construction industry can achieve the design goal. Starting from the background ofreplacing business tax with VATand the main points of VAT system, this paper expounds the problems of VAT in construction industry in the aspects of the special invoice obtaining, Party A supply projects, labor outsourcing, time of tax obligation and so on.In accordance with the characteristics of the construction industry, this paper puts forward to draw lessons from the policies ofVAT on agricultural products. This paper raises that part of the input tax should be allowed to deduct, construction enterprises should be allowed to deduct a certain percentage of loan cost expense, and at the same time, effective measures should be taken in the Party A supply project to eliminate tax differences due to different material suppliers.