Comparative Study On Tax Regime Of Controlled Foreign Company

With the development of world economy, the cross-border flows of capital increasingly normalized, tax competition between countries is more intense, multinational companies which invest overseas will consider taxation factors in priority. Set up a controlled foreign company (CFC) in tax havens is an important way to avoid corporate tax. The principle is the use of CFC-avoidance tax laws in the countries of deferred tax provisions, the profits from tax havens such as accumulation in low-tax area, to obtain the deferred tax benefits. CFC transnational tax planning by taxpayers and tax avoidance behavior, severely damaged the interests of their country's tax revenue, so that countries establish a controlled foreign company tax regime to regulate such behavior. A country sets up such a tax system which conducts special income tax adjustments on foreign companies established by domestic residents in low-tax areas such as tax havens in order to avoid the erosion of its tax base to maintain its tax benefits.This article contains four chapters, based on the summary of existing domestic and overseas research .The article systematicly discuss the generation, development, basic content, tax levied relationships,and basic assessment of the CFC tax regime. This article also incorporates the latest legislations and law revisions of countries in the world,put forward proposals to further improve the CFC tax regime. The first chapter starts from discussing the international tax avoidance, in the form of a brief introduction, then focuses on the definition of tax haven and its impact, leads to CFC and the tax regime to counter it,that controlled foreign company tax regime,which is the basis for this article and the logical starting point.The second chapter discusses the definition of CFCs in detail.It discusses the specific standards of determine whether a foreign entity is a CFC,for the first chapter of CFC and its harm, mainly around the "control", "incorporation location " and "tax avoidance purpose" ,such as "De jure control", "de facto control" ,"White List", "blacklist" and "Grey List", "test method" and "proof method ".In this chapter, the author refer the relevant tax legislation of the world's major countries and international organizations, combined with the theory and practises of relevant scholars,discussed in detail how to identify the CFCs.The third chapter discusses the application of the CFC rules in the tax collection and paying and the relevant legal relationships. Through the explanation of the rights and obligations of the leviers and taxpayers, with the analysis and induction of the object of taxation namely the taxable income, systematically discussing the appliance of the CFC rules in the process of the taxation, and proposing the author's specific recommendations.The fourth chapter, basing on the analysis and summary of the content above, is the review of the CFC tax regime and induction of the problems, and to put forward constructive views in respect of the legislative principles and objectives and the design of the tax regime, such as the identification of tax havens, the avoidance and counter of the "control" standard,and the identification of taxable incomes, etc, all of this need to be improved and amended.The last part is the conclusion, indicating that the controlled foreign company tax regime should closely integrate with the finance, foreign exchange and other related systems,and the relevant government departments should work together with the tax authorities to ensure the effective operation of the tax system。In the activities of counter cross-border taxpayers'tax deferral, the influence should be minimized, in order to make sure that the legitimate business can sustain and have a good development.