Based on the non-equilibrium growth model proposed by Baumol (1967), and the exploration of a new round of fiscal and taxation reform, this paper examines the internal economic logic between the business-to-VAT reform and the evolution of industrial structure upgrading through a simple theoretical analysis.Then based on the provincial panel data from 1995 to 2014, it uses the panel vector autoregressive model to empirically analyze the influence of the business-to-VAT reform on the evolution of China's industrial structure upgrading.It arrives at the results as follows:firstly, in terms of the results of GMM and impulse response, the new round of turnover tax reform which is based on the business-to-VAT reform, improves the proportion of the tertiary industry in the national economy and reduces the proportion of the secondary industry, thereby promoting the evolution of industrial structure upgrading; secondly, in terms of the results of variance decomposition, it can be seen that the policy-shock impact of the business tax variable on the secondary industry is greater, and the policy-shock impact of the VAT variable on the tertiary industry is greater; and the effect of the turnover tax reform on the tertiary industry is greater than the one on the secondary industry.