Research Of Foreign-invested Enterprises In Tax Avoidance

With the rapid development of economic globalization and China's economic takeoff, China's foreign-invested enterprises (including Hong Kong, Macao and Taiwan-funded enterprises) tax avoidance in China has become increasingly serious. However, since China has just opened his gate for short time relatively, from the legislative and judicial practice, China's anti-avoidance needs to be further improved and enhanced.For long times, how to regulate international tax avoidance effectively has been a major problem for nations solved. Abuse of transfer pricing,, use of capital and the weakening of tax havens, are the main means for Multinational Corporation evading corporate income tax. Theoretically, the international tax avoidance and anti-tax avoidance have become a major theme for international income tax law research. Currently, nations use extensively the principle of "normal trading principles" as a transfer pricing tax standards to regulate transfer pricing, but because of the principle's limited applicability, there are lots of difficulties to use it in practice. "APA"as a kind of means of price beforehand confirmation has been put a premium on the use. Because there are often reciprocal clauses among treaty powers in tax agreement, coupled with the differences or omissions coming from nations' explaining the agreement, it is possible that some preferential terms were abused to avoid tax by transnational taxpayers. With the ways of amending respective domestic laws and interrelated Agreement, nations were engaged in constant struggle for abusing agreement. Meanwhile, the establishment of tax havens has facilitated tax avoidance for more and more companies. Many countries opposed strongly to their taxpayers establishing subsidiaries in tax havens by adopting legislation. The anti-avoidance measures above have effectively curbed the spread of international tax avoidance, but the international tax avoidance phenomenon has not disappeared completely.In China, the problems of foreign-invested enterprises in tax avoidance are very prominent, foreign-invested enterprises in China use all sorts of ways such as transfer pricing, capital dilution, abuse of tax agreement , extending tax incentives, reverse-avoidance and other methods to avoid tax or reduce tax obligations, all of above avoiding tax means resulted in the reduction of China's financial revenue and finally would put bad impact on the fair competition among enterprises and China's investment environment. At present, China's anti-avoidance work is still in the initial stage. There are many problems in the anti-tax evasion work, especially lack of anti-avoidance legislation.Therefore, in this paper I started from the concept of international tax avoidance , tax evasion methods and the international anti-avoidance measures, and then analyzed the major causes , methods and characteristics for China's foreign-invested enterprises' tax evasion . On the basis of above research , I analyzed China's anti-avoidance legislation's achievements and shortcomings and attempted to put some measures for china's anti-avoidance legislation in order to do some beneficial exploration for China's future anti-avoidance legislation.