During the prosperity and development of the financial industry, the trust business has made a striking progress and won an important and incomparable place in the financial field. The use of trust system has gradually extended from the field of property management for other people to the applications of investment, financing, social security and public welfare. All in all, the trust industry has played a positive role in Chinese economic development and financial reform.However, the gap between the trust business law and the tax law has made an extraordinary challenge to our current income tax system as the legal and policy environment of trust improved enormously. Therefore, the taxation of trust income has become a significant issue to tax theory and practice circle as it is the frequent object of taxation. There are serious problems such as double taxation, tax avoidance through trust, improper tax policy tilt in Chinese trust industry. The lack of clear laws and regulations brings a great risk of law enforcement to the tax authorities in terms of tax management of trust industry. This paper takes the trust financing business as the main object, using case study of the trust financing for real estate to analysis the tax issues for the trust settler, the trustee and the beneficiary during the three processes of trust: establishment, phase term and termination. Moreover, it’ll reference the successful experience of the income tax system on trust from the foreign developed countries to discuss the subject of tax payment, the tax object, the tax rate, the tax preference, the administration of tax collection, the trust anti-avoidance measures and so on. The purpose of this paper is to try to establish a suitable income tax system of trust for the current tax system in our country. |