Research On Issues Of China’s Enterprise Foreign Tax Credit Regime

The enterprise foreign tax credit regime is extremely important in a country’s international tax system and has a significance effect on the global competitiveness of its enterprises. At present, China’s enterprise foreign tax credit regime cannot effectively eliminate the international double taxation or coordinate with global competitiveness. This situation may bungle the best opportunity of foreign investment for our enterprises. Therefore, this paper gives a detail research on the issues of China’s enterprise foreign tax credit regime and makes feasible suggestions for it.The first part of this paper summarizes the legislative framework of China’s enterprise foreign tax credit regime and points out its deficiency. The second part analyses the problems of China’s enterprise foreign tax credit regime, including the place of source, enterprise cost, ordinary credit method, condition of indirect credit on the base of China’s conditions at home and aboard. In conclusion, the third part discourses upon the back ground of tax principles and practices of other countries before giving the principle we should carry out for this issue, that is the combination of capital import neutrality and capital export neutrality, to keep the balance between the international competitiveness of enterprises and interests of national tax sovereignty. After that, this paper profoundly elucidates the detail suggestions of China’s enterprise foreign tax credit regime, including the measure of the place of source, the identification of enterprise cost, the use of full credit method and so on. In the end, this paper assumes and explains the expectation of China’s enterprise foreign tax credit regime in the long-term.