On Legal Regulations Against International Tax Avoidance Engaged By Off-shore Company

In the background of economic globalization, transnational investors utilize the discrepancy of different countries' tax rates, especially off-shore areas' preferential tax measures to avoid their international tax burden and maximize after-tax profits. These result in abnormal flow of multinational capital, and erode the tax bases of relevant countries seriously. Sovereign states and international organizations started studying measures to restrict these tax avoidance actions and received notable achievements. The rapid development of off-shore companies and their tax avoidance actions also affect our country largely. So now it is urgent to study the legal counteracting measures against international tax avoidance engaged by off-shore companies, so as to protect our country's tax finances and the fair tax circumstances.This thesis is divided into four chapters. Chapter I deals with the general introduction of off-shore company, off-shore areas, and international tax avoidance. Then this chapter concisely analyses the part that off-shore companies play in international tax avoidance, and its effect to the development of international tax law.Chapter II analyses the domestic legal regulations against international tax avoidance engaged by off-shore companies. This chapter mainly elaborates the revision of tax and corporation law of America, Germany, and Japan etc. The Controlled Foreign Company Rule of America canceled deferral of paying tax policy, so that off-shore companies should pay for resident income tax in time. The Foreign Tax Act of Germany restricted their residents from registering off-shore companies in off-shore areas. Pseudo Foreign Company Act of Japan pierced into the veil of off-shore companies, regarding them as residents when levying income tax.Chapter III analyses the international legal counteracting measures against international tax avoidance engaged by off-shore companies. In bilateral international cooperation, the chapter mainly analyses the current situation of bilateral tax treaties between on-shore countries and treaties between on-shore countries and off-shore countries with some existing problems. In multinational cooperation, the author mainly analyses European Communities' Savings Directive; the OECD Reports on Harmful Tax Competition and the Agreement on Exchange of Information on Tax Matters; and the main actions of international tax forums, including the governmental Global Tax Forum and the Tax Justice Network, which is ungovernmental.Chapter IV firstly analyses the positive and passive impacts of off-shore companies on the economy of our country. Secondly this chapter analyses the present legislation situation of protecting off-shore companies from international tax avoidance, in which it lays emphasis on the new Company Income Tax Law implemented on January 1, 2008, it also points out several defects of the new tax law on its regulations of CFC. On the basis of above analysis, the thesis makes some advisable advice to perfect relevant legislation: clearly define the concept of off-shore companies and off-shore areas; govern different off-shore companies in distinct classifications; consummate the CFC rules and foreign interest tax system; strengthen international cooperation in front of intense international tax competition, etc.