Complete The Taxation Of Trust Income In China

A trust is a special system whereby a person (trustee) holds or uses property for the benefit of one or more others. The trust has special functions such as managing the property, investing, financing and public charities. It can be used in almost every field of the market economy. The trustee is given legal powers to hold and manage property for the benefit of one or more others. Although legally the trustee has ownership of the assets, the trustee does not benefit from the income generated by the property.In western countries when a trust is first created its aim is to reduce the tax liability of the assets owner. During the trust development, the trust often is used on the edge of legality. In the past, many people used a trust to avoid incurring any tax liability altogether. Because this affected the ability of western governments to generate revenue, they began writing new tax laws that addressed how trust assets could be taxed. Taxation of trust revenue, to some extent, is similar to how other revenue is taxed, therefore, current tax codes needed only to be amended. The taxation of trust revenue is complicated by such questions as, who is the tax payer, when revenue should be taxed and how to treat trust revenue from public charities. In China the creation of trusts is growing rapidly. But, until now, there are no specific rules or code regarding how to tax trust revenue. This will affect the future of the trust development and the revenue of the government. This is why the writer choose to research this topic.This dissertation is intended to research the system of law on taxing on the income of trust which is named by the writer"Complete the Taxation of Trust Revenue of China."This dissertation has four chapters.Chapter One defines what is taxation of trust revenue and discusses some theories regarding taxation of trust revenue such conduit theory. This theory looks at the trust as a conduit for transferring income to the beneficiary. Because of this, the tax payer should be the beneficiary, not the trust or the client.Chapter Two discusses problems China has regarding the taxation of trust revenue. Some of these problems include the definition of a trust is unclear, the conflict between double ownership on trusts in western countries and single ownerships in China which may lead to double taxation on trust revenue. Another problem is China does not have rules to regulate how a client may abuse the trust. In addition, the rules regarding charitable trusts are not clear regarding taxation of their revenue.Chapter Three introduces some western countries and regions laws regarding taxation of trust revenue. These countries include Great Britain, the United States, Japan and Taiwan. These countries and regions were chosen to be included in this dissertation because their laws governing taxation of trust revenue have a long history. China can learn from these countries successes and failures regarding this issue.Chapter Four discusses how to complete China's trust revenue taxation laws incorporating what has been successful in other countries without losing sight of any special circumstances that trusts in China may pose. The ideas expressed in this chapter use the conduit theory, discussed in Chapter One, to resolve with whom the tax liability should lay. In addition, this chapter discusses when the government should tax the trust revenue based on the different beneficiaries. For example, if the beneficiary is a company, the trust revenue should be taxed based on corporation income tax laws and if the beneficiary is an individual, trust revenue should be taxed based on personal income tax laws.In general, this dissertation uses comparison analysis as a basis for researching this topic. In addition, the writer uses the most current information and analysis from new angles for developing proposed actions.