A Study On U.S. Controlled Foreign Corporation Legislation

In the context of rapid development of offshore economy, multinational investors are often engaged in international tax avoidance activities, using offshore companies as the ideal vehicles. Accordingly, many countries and the international community continuously strengthen anti-tax avoidance mechanisms. Controlled Foreign Corporation Legislation (hereinafter referred to as"CFC Legislation") is one important mechanism thereof to combat international tax avoidance. The article focuses on U.S. CFC Legislation by analyzing its main content and latest development in details, and considers the approach for China legislators to improve the newly-enacted CFC provision.The article is divided into three parts: Introduction, Text and Conclusion. The Text consists of three chapters set below:Chapter 1 provides the background information of the development of U.S. CFC Legislation. After interpreting the concept of offshore jurisdictions and offshore companies, it briefly introduces the international tax avoidance methods taken by U.S. multinational investors using offshore companies as vehicles, and further analyzes the special challenges in U.S. anti-tax avoidance practice due to offshore companies.Chapter 2 comprehensively introduces and analyzes U.S. CFC Legislation. It figures out a general picture of U.S. CFC Legislation from the perspectives of its legal basis, main content and latest development. First, it points out the internal need to enact CFC Legislation under U.S. tax law. Then it describes the definition of CFC, the taxable income, the taxpayer and anti-evasion methods under U.S. CFC Legislation. Thereafter it addresses the latest development of U.S. CFC Legislation focusing on the so-called"Check-the-box Rule"and"Look-through Rule".Chapter 3 considers the referenceable merits of U.S. CFC Legislation from China's standpoint. It first provides a positive answer to the question whether China can learn from U.S. experience in the area of CFC Legislation. Then it analyzes the policy objectives of CFC Legislation for both the U.S. and China. Finally, it elaborates the approach choice, the cooperation between CFC Legislation and other anti-tax avoidance mechanisms and the coordination between CFC Legislation and bilateral tax treaty or arrangement.