Empirical Analysis On Special Tax Adjustment Of Thin Capitalization Of China

Thin capitalization is often used by multi-national company as one of methods for theinternational tax avoidance. Given the circumstance of tighter economic connectionbetween China and other countries, research on the feature of thin capitalization and thesupervision policy that involved is realistically important. China established its ownmarket economic system not long ago. Comparing to the developed countries, the legalsystem of China that serving the market economic system is not mature enough yet,especially in the field of tax law. Although, China has already set up the special taxadjustment mechanism for thin capitalization (hereinafter referred as mechanism), but thismechanism has its own weakness in practice. On the basis of provisions of the tax law,this thesis is trying to do the mechanism an audit-like test by the mean of empirical analysis.This thesis would be of certain value if during the test some potential problems could befound and properly suggested.Part I of this thesis is mainly about the relevant theory of thin capitalization. After theintroduction of the concept, perspectives of different subjects would be imposed on the thincapitalization in sequence so that the view of the tax law could be outlined. Meanwhile,the special view of the tax law could be the basis of the further research on the mechanismwhich is planned to be elaborated afterward. Part II of this thesis is the introduction of the evolution history of the mechanism of China.On the basis of the comment on the relevant stipulations of the past, the improvement ofthe mechanism shall be pointed out by comparison. The reader could get a sensibleimpression of the mechanism as well so that the next part has the law foundation to be builton.Since the thesis named with empirical analysis, putting the pen mostly on the case issomething reasonable. Part III founded on the basis of case fact as well as relevantstipulations of the tax law. Calculation and analysis of the stipulations of the tax law bothare the means that the author chose to observe and deliberate the running of the mechanism.Most outcome of my research belongs to this part, which includes the gap between thestipulations, legal research on the concepts without clear definition, and analysis on theconflict between mechanism and tax agreement following the suggestion for solution.Generally speaking, the thesis has mainly adopted theory-studying method, literaturereview method, empirical analysis method, and case study method. Innovation mainlyconcentrated on the application of the law and clarification of the relevant concept.Limited by the resource, the author didn’t practice in the field of tax. It’s dimmed thatwhether my research can pass the examination by practice or not. It’s really a pity for me.