On Legal Problems Of Tax Avoidance

With the opening-up of China toward the outside world, rapid developing of our country's foreign trade and continuous increasing of foreign capital. Tax revenue loss is becoming more and more serious as a result of many enterprises'tax avoidance action in the form of transfer pricing (TP), tax haven etc. This thesis synthetically analyses legal problems of TA in China, compares anti-tax avoidance policies in western developed countries and finds the existing issues in anti-TA field in China in order to improve anti-TA cause in China , promote taxation according to law and maintain our country's taxation sovereignty .The first chapter of this thesis mainly analyzes the intention and extension of the basic conception of AT and draws the definition in a narrow way: Tax avoidance is illegal behavior that taxpayer utilizes loophole or ambiguity of tax law to achieve the goal of reducing tax liability through abnormal arrangement which breaks the purpose of tax law. However, tax saving action refers to just behavior to reduce tax burden under the direction of tax law, which conforms to the historical recognition and accords with legislative orientation of AT. Meanwhile, the finalization of narrow conception draws a clear line between AT and tax saving in theory probing .In conclusion, Tax avoidance is that taxpayer abuses law possibilities to achieve legal economic goal through illegal arrangement so as to reduce the tax burden .Chapter of the thesis makes a concrete analysis of the action mode of tax avoidance such as taxpayers(natural persons and legal persons) migration , thin capitalization,transfer pricing, tax avoidance in tax haven , abusing taxation agreement, and permanent organization ,as is useful in finding tax avoidance action, strengthening countermeasures of tax avoidance in real work and legislation practice .Now, there is not a unified concept about the nature of tax avoidance action. In theory fields, some say it is legal , some say it is illegal and others say it is evasive. I prefer the latter due to its double characteristics (legal in form and illegal in nature) which provide the loophole of avoiding tax burden beyond the original meaning of legislation and the line of tax law ,therefore impractical in reality and evasive in nature.The second chapter describes the legal countermeasures of anti-tax avoidance by international organizations and developed countries in western world. So-called anti-tax avoidance refers to a series of countermeasures and controlling activities to stop tax-avoidance for revenue interests of sovereign countries .we should use somecountries'advanced experiences for reference to improve the deficiency of our country's current legislation of anti-tax avoidance. 1 Legal countermeasures on anti- transfer pricing: Adjustment methods to transfer pricing ---normal trade principle; Adjustment methods to transfer pricing--- advanced pricing agreement tax system ; Adjustment methods to transfer pricing---processing regulations(regulations on duties of presenting evidence ,on ways to settle arguments of transfer pricing ,on methods to settle double taxation ) 2 Legal countermeasures on anti- abusing taxation agreement: international lawful countermeasures(prohibition method, exception methods, clairvoyant and levy law methods, different channel methods and real trade methods ) ; domestic lawful countermeasures(listing existing civil methods of Switzerland ,U.S.A. and Germany)The third chapter analyses the legislation state of our country's anti-tax avoidance. Starting late in time , centering on transfer pricing , consisting of unsystematic terms with low level effectiveness. The following are some related rules and regulations to anti-TA:《People's Republic of China Foreign Investment Enterprise and Foreign Enterprise Property Tax Law》term 13 ,launched on April 9.1991;《People's Republic of China Foreign Investment Enterprise and Foreign Enterprise Property Tax Law Executive Regulations》terms 52-56 ,launched on June 30.1991;《People's Republic of China Enterprise Property Tax Law》launched on March 16.2007;《People's Republic of China tax collection and Management law》term 36;《People's Republic of China tax collection and Management law executive regulations》terms 51-56;《People's Republic of China Enterprise Property tax law》terms 41-48;《People's Republic of China Enterprise Property tax law implementation rules》term 109-123 ;The fourth chapter analyses the legislation problems of our country's anti-tax avoidance and puts forward the orientation of anti-tax avoidance. Problems: lack of a systematic law on anti-tax avoidance which is not only focused on transfer pricing, obscurity of tax collecting and managing law about the activities of transfer pricing tax investigation and accounting on the scene, lack of consequent measures to affiliated enterprises who refuse to send the application form of business intercourses after the punishment , lack of common standard of the cost of intangible asset , only listing 3 adjustment methods to transfer pricing in related files , present law system having difficulties in tackling more and more diverse and complicated tax avoidance activities. Our country is steered in the direction of improving legislation in anti-tax avoidance: 1 making an overall anti–tax avoidance term in law of tax collection and management. 2 announcing the lawful status of anti–tax avoidance agency .3 making laws and regulations to restrict thin capitalization . 4 establishing anti-tax avoidance in tax haven. 5 improving the collecting and managing system of anti-tax avoidance .Tax avoidance which will exist long , cause series of revenue problems and has caused great international attention by its negative impact can be avoided by good legislation (usually complicated and lagged behind the action of tax avoidance) that calls for our close eye and wise mind to find new development in this field. Only in this way , can we take effective countermeasures, take the initiative to maintain the interests of our country , promote the rapid development of economy and maintain the revenue sovereign and taxation security.