A Research On Tax-free Income In The Law Of Corporate Income Tax

Enterprise Income Tax Law of PRC was passed by National People’s Congresson16th March2007. It has been believed to be a legislative measure of significancefor formulating an equal legal environment of competition as well as promoting thedevelopment of China’s market economy. The new legislation amended variousassessment conditions such as tax subjects, objectives, bases, rates along with taxpreference. Tax-free income, which was first arose as the opposite conception of taxincome, is a dramatic creation by China in Enterprise Income Tax Law worldwide andthe topic of this thesis as well. A train of theoretical development, as the doctrine,function, objective theory and fundamental principles of tax law, could be representedin legal practice concerns tax-free income. The thesis would break through allegedsystem, and attempt to assure and approach the practical problems by referencingtaxable theory.Four chapters are comprised in this dissertation, the first chapter is to introducethe taxable theory, which is the rationale of tax-free income. A sort of literaturesurveys involve taxable theory would be summarized in order to distinguish the taxincome and tax-free income.The second chapter will analyse the background and rationale of specificregulations under taxable theory, then tax income would be compared with tax-freeincome for the purpose of demonstrating their difference between subjective andobjective, practical and theoretical. Furthermore, the rationality as well as theimperfections of the difference should be investigated by combining with theevaluation of the fundamental principles of tax law and the basic functions of tax.The third chapter is going to evaluate the process and cohesion of the legalsystem by researching the relevant legal documents of State Council, StateAdministration of Taxation and the Ministry of Finance, then the possible drawbacksand questions might be proposed.Chapter four shall make beneficial suggestions for enhancing the tax-free income system on the basis of the discussions in previous chapters.