The Research On Legal Regulation Of Thin Capitalization

The thin capitalization is a way for multinational taxpayer to avoid tax payment to maximize the interest of the enterprises.The obvious incentive for the multinational corporation to apply thin capitalization is the different tax treatment of interest and dividends.AT present,thin capitalization has become a wide-using approach of international tax avoidance used by multinational corporations.With respect to the damage and impacts on the tax revenue from thin capitalization,Develop a more comprehensive thin capitalization rules to regulate the behavior of thin capitalization is necessary. However, the stringency of the regulation should be based on the overall economic environment and the host country's policies towards foreign investment to determine the specific circumstances, otherwise it will be some legislators would like to see the host side.In this paper, the concept of capital and causes weakening of the analysis to explain the weakening of the capital in all of the tax, introduced for Economic Cooperation and Development (OECD), the regulation put forward two main methods of thin capitalization and its advantages and disadvantagesanalyzed in most countries adopted a fixed percentage of the rules, then some of our existing thin capitalization rules to prevent a serious sort out and analyze.Study at home and abroad on the basis of existing theories, proposed to build a fixed percentage of rule-based tax system in China's capital weakened, and its construction and improvement of them relies mainly on the important concepts involved in defining the scope of the content, so this paperon the basis of international experience, combined with our existing thin capitalization legislation status and actual situation of the system, weakening the tax system in the capital ratio rules for fixed debt / equity ratio of the set, calculate the object's identification, debt capital and equity capital in the rangedivided over interest was calculated and handling issues such as clear analysis defined a clear improvement of thin capitalization regime of countermeasures in order to make our thin capitalization rules to further improve, and a preliminary outline of a new international economic form of Chinese capitalweakening of the basic outline of the tax system.