Study On Compatibility Between CFC Legislation And Tax Treaty

Economy globalization has brought one after another wave of economic revolution, while the economic cooperation among nations has been strengthened. As a pioneer who takes the mission, Transnational corporation is playing a more and more important role in the transnational economic communication. At the same time, it also makes lots of new problems in international tax-evasion. Besides thin capitalization, transfer pricing, Controlled Foreign Company is also a method that transnational corporation uses for tax evasion. It generated in 1950s, and many countries have established their CFC legislations. The Enterprise Income Tax Law of PRC has enter into force on 1 January, 2008, which has the CFC system in this new law.As CFC legislation is a complex legal system, author will just focus on one of the problems, namely the compatibility between CFC legislation and tax treaties. There whole thesis is divided into five parts.In the preface, the author introduces the main purpose to write this thesis and point out the key issue waiting to resolve.Chapter One is the Generation of the Problem, including the concept of the Controlled Foreign Company, and the basic problems in CFC legislations. Then it goes to the compatibility problem.Chapter Two discusses the Theory and Practice of the Compatibility. The first section is about concept of Tax Treaty and the International Tax Disputes Resolutions. The second section is about the relationship of Domestic Law and Tax Treaty, and CFC Legislation and Tax Treaty.Chapter Three is about the new development of OECD Model Tax Convention on Income and Capital on compatibility problem. This chapter introduces different arguments on this issue and new changes in the Model Interpretation.Chapter Four discusses how to resolve the compatibility problem in China. The first section is about the CFC system established by the Enterprise Income Tax Law, including its contents and deficiency. The second section is about the possibility to invoke the conflict of CFC Legislation and Tax Treaty in China. The third section is about how to resolve the problem.