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Anti-Tax Avoidance And China's Tax Law Reform

Posted on:2006-11-07Degree:MasterType:Thesis
Country:ChinaCandidate:X LiuFull Text:PDF
GTID:2166360182457024Subject:Law
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With the deepening of market-economy reform and the influence of economic globalization, the questions about tax avoidance are more and more serious and show such characters as diversification, complication, internationalization and concealment. It has important significance on theoretical research of tax and the building of tax law system to resolve many difficulties that need urgently be resolved by tax worker, such as how to regulate tax avoidance action, how to give attention to taxpayer's wish of decreasing tax bearing at the same time with maintaining public and national benefits and offering fair competitive circumstance so as to realize win-win results, and how to ensure smooth processing of anti-tax avoidance reform. The author analyzes the tax avoidance in light of law-economics; and in view of the effect on taxpayers, tax authorities and local government behaviors after establishing regulation, balances income and cost, fairness and efficiency, and puts forward systemic schemes on improving anti-tax avoidance regulation. The paper includes three chapters: Chapter â… : Expounding the questions about tax avoidance. The author defines and analyzes meanings, character, emerging reason and sequent results of tax avoidance. Tax avoidance can be explained as an action that according to tax law leak, ambiguous or non-regulated rules in tax law, some taxpayer makes tax arrange and tax plan to decrease or deny the necessary tax responsibility and evade tax action. Although it does not disobey law and legislation of taxation itself, the avoidance action does disobey the purpose of tax legislation and should be next emphasis for improving tax law and tax law reform. Today, the avoidance phenomenon possesses four distinct characters, which include pattern's diversification and complication, internationalization and localization, concealment and artifice, more clearly taking advantage of tax preference policies, and increases the difficulty of anti-tax avoidance. There are internal and external reasons to cause tax avoidance. The internal reason is concerned that as a rational economic man, to attain profit maximization, less-risky tax avoidance will be selected as the way of paying less tax; the external reason is from the tax law leak itself and the strengthen of law concept which urges people to find out a legal way to reach lessening tax bearing. The objective reasons of international tax avoidance consist of heavy revenue burden, drastic market competition, differences in countries'tax laws and in non-tax laws. The influences from tax avoidance directly or indirectly represent decreasing revenue burden, attaining more governable revenue; leading to decrease of available fiscal revenue; leading to re-allocation of national income, and emerging price effect, shifting, tax evasion effect, and legal effect. Chapter â…¡: Analyzing and discussing anti-tax avoidance problems. On the base of law-economics, the author analyzes the effect and administrative cost of anti-tax avoidance rules. Tax avoidance should be known as the erosion of tax base, however anti-tax avoidance rules decreases the erosion and effectively enlarge tax base. Anti-tax avoidance rules established should be contrasted with non-efficiency of narrow tax base and cost of enlarging tax base, and the first-rank rules should make marginal revenue equal to marginal administration cost. The effects of anti-tax avoidance rules include fall of personal utility and elastic change of taxable income with the improvement of anti-avoidance rules. Increasing strength of anti-tax avoidance rules may decrease the change in elastic aspect of anti-tax avoidance, make tax avoidance person to pay out more expense and produce distortionary effect. The administrative cost of anti-tax avoidance can be investigated and analyzed through three aspects below: balancing problems of general and specific anti-tax avoidance rules, uncertainty problems and error application problems. Drawing on anti-tax avoidance rules and legislation experiences of several representative countries and combining with the realization of China's anti-tax avoidance, the author concludes main shortcomings on anti-tax avoidance problems as following: incomplete law and legislation related to anti-tax avoidance and un-uniform tax policies; neglected influence of taxpayer's action on designing and executing tax policies; no evaluation by tax authorities on anti-avoidance situations with economic analysis technique; fewer crew and lack of comprehensive quality working on anti-tax avoidance, that doesn't satisfy the need of more complicated anti-tax avoidance; not enough strict penalty and seriously moral degeneracy of taxpayer. Chapter â…¢: Describing author's view on China's anti-tax avoidance reform. With China's entering WTO and influence on China from economic globalization, anti-tax avoidance reform has been put on the agenda. Thereform should abide by four principles: fairness and efficiency, tax neutrality, virtual taxation, arm's length. These guiding principles may lower distortionary influence of tax on economy as possibly as it can, increase tax efficiency, and offer operating gist to regulate concrete anti-tax avoidance action. As far as independence is concerned, anti-tax avoidance rules is directly aimed at tax avoidance behavior, cannot be replaced by tax rules and should form relatively independent system. The intensity should be temperate, in another words, it cannot be too strict or exist in name only. The key point is balancing tax revenue and tax administrative cost, and embodies rule's intensity. The efficiency aspect of anti-tax avoidance rules is mainly to inspect whether the rules is applicable or not to the existence of tax treaty. Regarding to the relationship between general and specific anti-tax avoidance rules, the preferential sequence should be firstly suitable to the latter, then the former if not available for the latter. The design ideas on general anti-tax avoidance rules should include eight points as: legislation purpose, appropriate scope, tax avoidance as a requirement, tax dealing way of application, burden of proof, disclosure requirements, advance rulings and punishment items. Anti-tax avoidance reform is a long-term, complex and systemic project, which needs general rules and related measures to be coordinately carried out. The related measures should comprise clearing tax revenue preference measures and unifying tax polices on internal-funded and overseas-funded enterprises; simplifying tax system, enlarging tax base and rising quality and effect of taxation administration; improving facility equipments, equipping with compound talented persons and establishing sole anti-tax avoidance facility system; actively pushing on anti-tax avoidance evaluation and establishing anti-tax avoidance managing and monitoring system; strengthening international bilateral cooperation, developing multilateral cooperation and exploring to establish an international cooperation and harmony organization for taxation.
Keywords/Search Tags:Avoidance
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