International Tax Avoidance And The Legal Issues Of Anti-avoidance Research

With the globalization of world economy and the rapid expansion of multinational enterprises, international tax avoidance (ITA) has been found to be used in more and more ways and to be active in larger and larger scales. ITA not only does harm to the taxation of the nations involved but also causes chaos to the order of international capital circulation. With the continuous opening-up of China toward the outside world, especially after its entry into WTO, more and more multinationals will be coming to China for business operation as attracted by the huge potential market here. These foreign investment enterprise (FIE), on one hand, bring in advanced management experience, personnel and technology and makes up for the inadequate home investment capital; on the other hand, some FIEs aiming at the maximum profitability and the minimum tax burden, would seek for various illegal interests in an open way of ITA.The typical ITA methods used by multinational tax payers are the Transfer Pricing (TP),Tax Haven and the Abuse of Tax Treaty (ATT). From theories, ITA & anti-ITA has become one main topic in the area of International Tax Law. The current transfer pricing taxation rule used by most nations is so called 'normal transaction rule'. It is used to regulate the transfer pricing activities. But the rules is applicable only in a small number of cases and difficult to apply in practice. This is partly because that 'Advanced Pricing Agreement ', in which the price is agreed before an event, is widely accepted. There are often some mutual beneficial clauses in tax treaties between nations. But involved nations of the treaty may have different explanations and misunderstandings of the treaty. The international tax payers may abuse these misunderstandings and make ITA activities possible. More and more governments have participated in the battle to the Abuse of Tax Treaty by amending their existed tax laws and constituting new laws and regulations. On the mean time,with the Tax Paradises having been founded, many multinational enterprises use them to avoid Taxes on Income. Many countries also strongly opposite that their taxes payers found multinational enterprises on the Tax Paradises. These governmental actions have effectively taken the ITA activities into control. But the ITA activities are still not completely eliminated. China has established its own anti tax avoidance laws system. But there are still problems in the system. The government is still losing billions of yeans on taxation each year. The research on anti tax avoidance approaches will be valuable in decreasing tax lost and establishing a fair marketMade up of there chapters.Chapter One. To lay a solid foundation for the whole thesis, a complete and in-depth elaboration is conducted over the basic theories of international tax avoidance including the characteristics and motivations of anti-ITA regulations.Chapter Two. To compares three anti-ITA approaches used by different countries in the world, with emphasis on the civil laws and cooperation between countries.Chapter Three. Based on the current status and the legislation practice of anti-ITA, we propose some suggestions to solve the problem by legislation to enhance the government's ability of anti-ITA.