On The Application Of Trust Duct Theory In Trust Income Tax Law

Nowadays, under the China’s enterprise income taxation system, we do not recognize the particularity of the trust system. The missing provisions of the trust income tax are leading to the coexistence of trust tax avoidance and repeated taxation, which has hindered the development of the trust industry seriously. In this article, we proceed with basic problems of the trust income tax through the analysis of the nature of the beneficial right of the trust. We demonstrate the necessity of introducing trust conduit theory into the trust income tax law from tax law to undertake the concept of private law and the point of view of the essence of Taxation doctrine. Based on the above, we put forward two specific principles of the tax and the transfer of non taxable items of the real beneficiary. Meanwhile, for the lack of coverage and effectiveness of trust conduit theory, we creatively put forward the theory of " beneficiary’s representative" through the criticism of "the theory of trust entity as a supplement". When the beneficiary does not exist or is not specific, or share of benefit is uncertain, we make clear the theory of the "beneficiary’s representative" to the principal tax in order to establish a system of Taxation which is the main beneficiaries and trustee supplement. Moreover, we introduce "piercing the veil of trust" theory in the field of international anti tax avoidance which tax directly to the principal. We have formed the theoretical system of trust income tax law based on the theory of trust duct, and then try to set up a trust from the continuation and termination of three stages. Finally, we put forward specific ideas of establishing trust income tax system.