| Opening-up is the necessary way for a country’s prosperity and development.Continuing to expand opening-up is an inevitable requirement for adhering to the socialist road with Chinese characteristics.Today,China is experiencing great changes unseen of the world in a century.On one hand,China’s opening-up has been continued to expand,the Belt and Road has achieved fruitful results,trade power has been continuing to strengthen,the shift from a capital importer to a net capital exporter has been achieved,more cooperation with other countries under multilateral frameworks has provided strong impetus for building an open world economy.On the other hand,economic globalization is facing adverse currents.Unilateralism,protectionism and hegemonism pose a threat to world peace and development.COVID-19’s global pandemic is a catalyst for great changes unseen of the world.Developed countries are unwilling to lose the dominant and control rights of the international governance system,and frequently change international economic and trade rules to curb development in developing countries to protect their own vested interests,international multilateral governance rules are challenged and the global governance system is facing reconstruction.Facing the new situation,new challenges and new tasks,China adheres to promoting reform and development through opening-up.The 18 th National Congress of the Communist Party of China proposed to "comprehensively improve the level of open economy",so as to achieve the two new goals of "improving an open economic system with mutual benefit and win-win results,multiple balance,safety and efficiency" and "accelerating the transformation of the pattern of external economic development" and "actively participating in global economic governance and changing the role orientation on the global economic stage".At the Fifth Plenary Session of the 19 th CPC Central Committee,"basically forming a new system of open economy at a higher level" was listed as the main goal of economic and social development during the 14 th Five-Year Plan period.Under the background of building a higher level of open economy,Chinese multinational corporations have become an important hub connecting domestic and international "double circulation".The Chinese multinational corporations defined in this paper refer to the companies registered in the mainland of China in accordance with the laws of the People’s Republic of China,which have one or more foreign direct investment companies or other forms of affiliated relations outside China,carry out affiliated transactions with them,and engage in global production and operation activities.According to statistics,a huge amount of investment flows from China to tax havens every year,and a large number of enterprises are set up in tax havens,which will inevitably provide tax avoidance soil to obtain natural tax avoidance advantages.China’s international tax policy needs to respond more actively to the profit shifting of Chinese multinational corporations.Therefore,it has become an urgent task for the Chinese government to adjust the current policies of tax preference,anti-international tax avoidance and tax source control and protect the national tax interests from erosion.In essence,an open economy requires the equivalence of rights and responsibilities,the transparency of international rules and the fairness of global governance.The global tax governance system is not only an indispensable part of the global economic governance system,but also an important content of the coordination of global economic rules.At present,the international balance of power is undergoing profound adjustment,and the traditional international tax rules are unable to effectively curb the profit shifting and tax erosion of multinational corporations under the new situation,so the new international tax order urgently needs to be reconstructed.China should better and faster adapt to the historical change,make a more scientific response to the profit shifting of Chinese multinational corporations,actively participate in global tax governance and the rulemaking of international tax,and organize the international tax framework of domestic and international coordination,and balance the interests between developed and developing countries.At the same time,new changes have taken place in the task,role and path of tax decision-making and implemented in response to the profit shifting of Chinese multinational corporations.First,China’s current tax governance system to deal with the profit shfting of Chinese multinational corporations is difficult to work at full capacity,which requires China to take actions in domestic tax reform and international tax cooperation,and promote the construction of a new international tax order.Second,the existing world economic rules or global governance system is dominated by developed countries,which mainly reflects the interests of them.As the world’s largest developing country,China needs to give full play to the influence and responsibility of a big country,master more voice in the field of global tax governance,protect the interests of Chinese multinational corporations and China’s tax capacity,and break the monopoly position of western countries in the distribution of global profits and tax sources with the "China plan",and build a more equitable global tax coordination mechanism.Third,China must correctly analyze the current situation from the perspective of national strategy and national fundamental interests,correctly study and judge the development trend of world politics and economy in future,and plan long-term response strategies and actions.This paper studies the profit shifting of Chinese multinational corporations from the perspective of experience,and tries to provide new solutions to the profit shifting of Chinese multinational corporations based on the background of building a new high-level open economic system.Firstly,taking the data of Chinese listed companies as an example,this paper uses the method of empirical analysis to test the reality of profit shifting of Chinese multinational corporations.The conclusion shows that compared with enterprises without overseas related party transactions,Chinese listed companies with overseas related party transactions have significant profit shifting behavior;compared with Chinese listed companies with related party transactions in non tax havens,the profit shifting behavior of the ones with overseas related party transactions in tax havens is more obvious.Heterogeneity analysis shows that the degree of financing demand,the intensity of tax collection and management in the province where the domestic registration is located,and the nature of equity of enterprises will all affect the degree of profit shifting of Chinese listed companies.It finds that falsely increasing the number of transactions,creating unrealistic value contributions,weakening capital,adjusting the structure of R&D expenditure and abusing tax treaties are all important means for Chinese listed companies to transfer profits.The case analysis shows that transfer pricing and the use of controlled foreign companies are also important channels.Taking2019 as an example,it is estimated that about 5.31%-9.94% of China’s enterprise income tax base has been eroded due to the profit shifting of Chinese listed companies.In addition,there are obvious differences in the scale of tax base erosion caused by profit shifting of listed companies in different regions and industries.Secondly,this paper combs the policies and actions to deal with the profit shifting of Chinese multinational corporations since the reform and opening up,and divides them into learning and exploration for the purpose of "Introduction"(1978-1991)The four stages of continuous improvement in the market economic system(1992-2000),the transformation to pay equal attention to "bringing in" and "going out"(2001-2012),and boosting the new open economic system and jointly building a new international tax system(from 2013 to now).Each stage presented outstanding characteristics suitable for the political and economic conditions at home and abroad at that time,and made important achievements.However,compared with the world’s advanced experience,there are still great deficiencies and defects.Thirdly,under the background of the new open economic system,Chinese multinational corporations’ profit shifting behavior presents new characteristics.First,the digital economy challenges the traditional policy of dealing with profit shifting,which makes it difficult to determine the tax base of enterprises,confirm the taxpayer.The two is that COVID-19 has triggered the bottom competition of governments,expanded the digital development space of multinational corporations,and created an opportunity for the profit shifting of China’s multinational corporations.The huge impact of the epidemic on multinational corporations may also make them run smoothly for survival and competition.The third is the multiple game of the reconstruction of the international tax order,and the contradictory decision of the government to development or anti tax avoidance makes multinational corporations can obtain the "benefits of fishing".Fourth,the unique VIE framework provides a "gray area" in the field of tax law supervision for Chinese multinational corporations.Fifth,multinational corporations’ ways of profit shifting are more abundant and hidden.Sixth,some multinational companies rely on capital monopoly to transfer profits.This paper further analyzes the problems,manifestations and practical reasons to deal with the profit shifting policy of Chinese multinational corporations under the new open economic system,including the insufficient effectiveness of domestic tax policies and related actions,the limitations of international cooperation and coordination,and the Chinese voice in global tax governance still needs to be comprehensively improved.Finally,this paper puts forward policy suggestions for the response of profit shifting of Chinese multinational corporations under the new open economic system.First,it suggests five principles that should be followed: adhering to serving the overall situation,adhering to tax administration according to law,adhering to problem orientation,adhering to the guidance of tax modernization and adhering to domestic and international overall planning.Second,this paper puts forward three policy suggestions: deepening domestic policy reform and innovating theoretical research and action practice;Taking national sovereignty and interests as the fundamental starting point and adhering to international cooperation under multilateralism;Take the concept of a community with a shared future for mankind and undertake the future mission of global tax governance.The possible innovations of this paper are mainly reflected in the following aspects:(1)Innovation from the perspective of topic selection.It is the first time to study the profit shifting of Chinese multinational corporations under the background of the new open economic system.It pays attention to the new facts,characteristics and ways of profit shifting under the new situation,and suggests new principles and new methods of governance.Focusing on the transformation of China’s status as a net exporter of capital and China’s basic national conditions in the primary stage of socialism,and taking the protection of China’s fundamental interests as the starting point,this paper puts forward a domestic and international coordinated Chinese plan to deal with the profit shifting of Chinese multinational corporations.As a participant and leader in the formulation of international tax rules,Pay more attention to the interests of developing countries and the establishment of a fair,reasonable and equitable global tax governance system framework.The proposal of China’s plan can not only provide support for safeguarding China’s national tax rights and interests,but also provide a factual basis and collection and management direction for China’s participation in the reconstruction of the global tax governance system.It is of great significance to reshape the future international tax rules.(2)Reconstruction of empirical framework.First,the existing literature limits the research samples to enterprises with foreign direct investment behavior.In fact,this research design will cause errors in the identification results of enterprise profit transfer.The reason why an enterprise can avoid cross-border tax is not that it has established subsidiaries or other branches abroad,but that it has transactions with related parties.If there is no economic behavior such as capital exchange between the two micro entities,it is groundless to talk about tax avoidance.Second,the current research on profit shfiting generally focuses on the special form of tax avoidance behavior with the help of tax havens,fails to make an in-depth analysis of the more general global profit transfer behavior,and ignores the profit transfer motivation of enterprise diversification.In this paper,the experimental group of the research sample is expanded to all enterprises that have conducted overseas related party transactions,and a more scientific research framework is reconstructed.For the first time,the relevant empirical test is conducted based on whether the enterprise has conducted overseas related party transactions,and the research conclusion is more credible.(3)Calculation of the scale of tax base erosion.Taking Chinese listed companies as an example,this paper estimates the proportion of erosion of China’s enterprise income tax base caused by profit shifting due to overseas related party transactions in 2019,and makes a further in-depth analysis from the regional and industrial levels,which is also the first time in the existing research field.It is still an emerging topic for China to deal with the profit shifting of Chinese multinational corporations under the new open economic system.At present,the data about the profit shifting of Chinese multinational corporations are still flawed,and the cases are still not rich,which makes the research of this paper have some limitations.In addition,the domestic policies and actions related to the profit shifting of Chinese multinational corporations are still immature and unsystematic,and the international tax rules are still in the process of profound adjustment and have not formed a mature solution,which may increase the uncertainty of relevant research.However,it is for this reason that this paper makes a forward-looking exploration on the practice of China’s international tax policy in the future.The profit shifting problem studied in this paper is only a representative link in the process of China’s participation in global tax governance.It aims to throw away the jade and provide theoretical and empirical reference for a more comprehensive and in-depth study of China’s participation in Global Tax Governance in the future. |
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