A Study On Taxpaying Planning

As a special tax-related activity of private autonomy, taxpaying planning is meant to be an effective way for taxpayers to reduce tax burden and maximize their interest. However, implementation of such kind of panning will lead to a decrease in taxes converted to treasury in a certain period, and in the short run go against the national financial goal; so analysis and discussion on its legitimacy remains hot in academic circles in recent years. Up till now, since an agreement has already been reached to recognize the legitimacy of taxpaying planning, focuses of taxation authorities and related academic circles shift to issues such as how to regulate taxpaying planning by law, in order to bring its function of protecting taxpayer's legitimate interest into full play and promote the legislation of taxation. Realizing a double increase in national wealth and state revenue by seeking a state of balance and efficiency between the protection of taxpayers'right of tax reduction and government's right of controlling the finances, is, on one hand a principle and goal for law regulation of taxpaying paying, on the other hand a value orientation in the development of taxpaying planning; so it is a necessity to systematically analyze taxpaying planning and gain a panoramic view. On basis of taxation practice in China, from perspectives of law and economics, this paper probes into the rationality and validity of taxation panning, based on which, this paper further combines taxpaying planning's historic evolution with its current situation, and puts forward several questions concerning its regulation by law and mode selection, etc. To analyze and elaborate on taxpaying planning, this paper consists of four parts: review on definitions, analysis of laws, law regulation and mode design.Part 1 is an overall review on taxpaying planning. This part serves as a foundation for the whole analysis. It begins with defining taxpaying planning, and then summarizes different scholars'descriptions of it, and induces basic characteristics of it, i.e. taxpaying planning is an advanced, purposeful, legitimate, and risky economic activity aiming at reducing tax burden. Then this part focuses on the analysis of taxpaying planning from perspectives of law, treats it as a juristic act to analyze its nature and constitutive requirements, and points out that the implementation of taxpaying planning, as other tax related juristic acts, can result in generation, changes, and annihilation of taxation legal relationship; so the nature of taxpaying planning is innately different from that of other tax-related activities, which is to say, the nature of taxpaying planning lies in defying the constitutive requirements of taxation or altering its originally fitted constitutive requirements; this very nature emphasizes that tax liability which already exists can seldom be exempt through taxpaying planning; in the opposite, only the potential taxpayers who probably undertake certain kind of tax obligations is the subjective element of taxpaying planning. Reducing tax burden by arranging production and operating activities in advance is the meaning expression element. On the basis of these previous analyses, this chapter distinguishes taxpaying planning from some tax-related infringements like tax avoidance and tax evasion in aspects of transaction intention, economic substance, and results action, and paves road for further analysis of this paper.Part 2 focuses on the foundation of the rationality and validity of taxpaying planning. This chapter serves as a link between the preceding and the following. It carries on the topic by analyzing this special activity of taxpaying planning from perspectives of law with relevant theories of law and economics. First, based on the assumption of economic man in law and economics, this part analyzes taxpayers'choice of behavior from three aspects--intrinsic motivation, extrinsic incentive, and risk analysis, and comes to a conclusion that the nature of seeking maximization of wealth and the externality of social goods drive taxpayers to pursue a reduction in tax; moreover, the attribute of risk avoidance drives taxpayers to choose a tax-reducing method with the least risk; so taxpaying planning becomes a rational choice for an economic man. Second, proceeding from the basic idea of protecting private-sector mechanism as the pillar of a tax state and individual economic freedom, the author of this paper points out that the right of taxpaying planning originates from the protection for economic freedom and restriction on the public power in statutory taxation principle, which not only is in accordance with the goal of dualization in development of the state and society but also matches the legal understanding of no forbidden by the law is freedom; so taxpaying planning, as a taxpayers'basic right, stemming from statutory taxation principle, is further confirmed. Then this part gives an analysis from the perspectives of private autonomy and taxation game. The author holds the idea that taxpaying planning is taxpayers'utilization of economic activity dimension and the right of choice for economic form which are bestowed by taxation law, which is also a game of tax levy and taxpaying; in this game, a state of balance and coordination is achieved between the government's right of controlling of the finances and private property rights. Analysis in this part offers readers of this paper a clearer understanding of taxpaying planning, and at the same time points out direction for the following parts concerning taxpaying planning's regulation by law.Part 3 emphasizes on the historic evolution, current situation of taxpaying planning and its related system improve, which is the core of this paper. On the basis of the previous theoretical analyses, this part provides its readers with a brief introduction to the understandings of taxpaying planning in different countries and their development history, observes its historical development and current situation in China, and draws lessons from western countries that both taxpaying planning conducted by taxpayers and taxation assertions made by taxation authorities are urgently to be regulated by laws and regulations. Conditioned by limited rationality and vagueness existing in reality, there is a strong tendency in taxpaying planning to become a tax-related infringement. To be deeper, no matter to balance the relationship in taxation interest demand, or to strengthen law construction, or to protect market transaction activities, it is necessary to regulate taxpaying planning by law. According to the realities in China, it is advised to adopt a generally required way, in other words, the clearly stipulated basic principles, and focus on rational guidance and risk aversion. Obeying these basic principles, regulation by law of taxpaying planning can link different tax-related norms and rules by certain criteria, and contributes to forming a unified standard when recognizing specific taxpaying planning activity; especially when there is no suitable specific clause, it is the last choice for taxation authorities, and it also exerts a restriction on their discretion. Concerning these, this paper comes up with four principles: legally protecting taxpayers'basic rights and the stability of law, and obeying the tax principle legality; appropriately expecting and enhancing taxation abeyance, and obeying the protective principle for taxpayers'trust; cutting the systematic operating cost, keeping taxation laws'neutrality, and obeying the principle of efficiency; balancing the government's rights of controlling the finances and the individual right of private property, seeking an optimistic breaking-through point, and obeying the principle of appropriateness. Applying these principles to the regulation practice and insisting on system improvement of taxpaying planning will have great significance in the protection of taxpayers'rights, restriction on taxation authorities'discretion, and the eventual realization of efficiency and equilibrium in the tax-related law construction.Part 4 high lights the complement of system design and mode selection of taxpaying planning in China. This part serves both as a conclusion of pervious statement and contemplation on the regulation practice in China. Owing to the rapid expansion of modern social circle and the eternal existence of information asymmetry, a great variety of middlemen, intermediaries and agent system come into being in order to save transactional cost and enhance its efficiency. As supplement and expansion of private autonomy, civil agent system has been wildly applied in civil and commercial law. As one kind of special civil agency, tax agency gradually immerged and develops along with the increasingly complicated economic life and specialized taxation legislation. Standing in a fair position independent from each side in tax levy and paying, a taxation agency utilizes its expertise, assists taxpayers to correctly carry out taxation responsibly, and at the same time protects their legal interest; as both a defender for taxation law and a protector of taxpayers'rights; he bridges each side in the relationship of tax levy and paying, and becomes an important constituent in the modern taxation law system; so taxation agency become an inevitable choice in the further development of modern taxpaying planning. However, since he has sufficient expertise and rich experience and serves as a double-edged sword, a taxation agency can probably deteriorate to an accomplice even the mastermind in taxation right abuse, which can be often observed in recent years. So the author of this paper suggests that proceeding from the code of profession conduct and legal liability recognition, taxpaying planning activities conducted by taxation agencies should be regulated. Especially in the current situation, it's urgently demanded that current laws and regulations of taxation agencies should be classified and integrated, a Law of Taxation Agency should be enacted, the rights and obligations of taxation agency should be further clarified, the sense of legal responsibly should be enhanced in special service sectors as taxpaying planning, and the legal right of taxpayer as principal should be protected; those previous methods can not only boost the healthy development of taxation agent service but also benefit the maturity and perfection of taxpaying planning activities.