Tax Evasion Of Foreign Invested Enterprises In China And Its Countermeasures

By consequence of China's open to the world and rapid development of its so-called socialist market economy, and after China's access to WTO in particular, foreign investment has been becoming a beneficial supplement to the China's economic development and an increasing point to Chinese tax revenue. In the meantime, the tax evasion of foreign invested enterprises in China goes more and more serious, which has materially damaged the interests of China. The tax evasion will cause the outflow of the Chinese tax revenues and distort the fair competition of the market system. The interests of China, as well as its investment environment and foreign trade and economic corporation, shall be damaged by such tax evasion. It is pressing that relevant researches shall be conducted on tax evasion of foreign invested enterprises and its countermeasures.The following methods have been adopted by foreign invested enterprises for the purpose of tax evasion: price transfer, capital weakening, abuse of tax convention, taking use of the loopholes existing in China's tax policy. These methods have shared the characteristic of adverse tax evasion. China started its anti-tax-evasion work only in recent days and there existing quite some shortcomings in the legal system and regulating measures. Lack of information, weak human resource, and the serious localism protection in particular, are the bottleneck consisting in the anti-tax-evasion work of China. It is necessary for China to study the experience of western countries in respect of the anti-tax-evasion upon a combination of its actual situation. The anti-tax-evasion work shall be strengthened by the betterment of the legal system, and sufficiently exerting the function of the institutes and personnel in charge of anti-tax-evasion. A comprehensive monitoring system shall be established step by step so as to assure the economic interest of China and keep the market order stable.Starting from the primary theory introduction of the tax evasion and anti-tax-evasion, this discourse provides detailed analysis of the status, causes of formation, characteristics, harms and manner of the tax evasion of foreign invested enterprises in China, by using the methods of nature analysis and comparative research. The anti-tax-evasion work of China has then been deeply discussed in respect of its current situation and existing issues. Upon the above this discourse finally raises suggestions and countermeasures for the anti-tax-evasion work from the following aspects: the improvement of awareness, the betterment of tax regime and strengthen of taxation regulation, etc.