Research On The Affiliated Transaction Tax Avoidance And Anti-avoidance

At present, problems of enterprises use of Affiliated Transactions to avoid taxes and the tax authorities to anti-avoidance faced with varying degrees by most countries in the world. As China's rapid economic development and the increasingly serious situation of domestic and foreign-funded enterprises use of Affiliated Transactions to avoid taxes, the anti-avoidance regulation of Affiliated Transactions of enterprises becomes more necessary and urgent. The new "Enterprise Income Tax Law" promulgated in 2008, which introduce of the cost sharing agreement, the Thin Capitalization anti-avoidance and other advanced anti-avoidance tax and concepts, establish our basic anti-avoidance system of Affiliated Transaction and greatly enrich and improve our anti-avoidance legislation. At this stage, to carry out researches on tax avoidance and anti-avoidance of Affiliated Transactions of enterprises becomes very meaningful.This paper will be under the background of the new "Enterprise Income Tax Law", associated with the present situation of tax-avoidance of Affiliated Transactions and the practice of the anti-avoidance, explore problems that may arise in application of the anti-avoidance system to reality and offer recommendations to improve it, with using the relevant experiences of developed countries. The findings of the paper won't only take some useful message to the further legislative improvement but can offer some specific recommendations to the practice of anti-avoidance of Affiliated Transactions.This paper divides into three parts. The first part is about the analyses of the present situation of enterprises use of Affiliated Transactions to avoid taxes, which laid the theory and practice basis for the paper. Firstly, this part defines the meaning of tax avoidance, the legal nature of tax avoidance and other basic theoretical issues, and then focuses on the exposition of the legal motivation and principal ways of enterprises use of Affiliated Transactions to avoid taxes. The second part focuses on the new "Enterprise Income Tax Law" and its implementing regulations on anti-avoidance provisions of Affiliated Transactions and the more than 20 years of practice in anti-avoidance of Affiliated Transactions in China. Through analysis of an anti-avoidance case, pointed out problems that may arise in application of anti-avoidance system of Affiliated Transactions to reality in this part. The third part puts forward sound countermeasures and proposals on legislation and enforcement of anti-avoidance, which based on learning of relevant legislation and experience in anti-avoidance of Affiliated Transactions in developed countries and combined with problems arisen from China's anti-avoidance practice.Through a large number of literature studies, this paper taking the standpoint of the system as to guide and using a combination of two perspectives of the legal and accounting, points out principal ways of enterprises use of Affiliated Transactions to avoid taxes in China. Then, synthesized to make use of contrast, give example, induce etc, research method, takes a comprehensive analysis of Legislation and practice problems about China's tax avoidance and anti-avoidance of Affiliated Transactions and puts forward specific recommendations for improvement, learning from foreign experience and on the basis of our own present situations.