Research On The Concept Of "Beneficial Owner" In International Tax Treaty

The Term "beneficial owner" first appeared in the Model Convention with Respect to Taxation on Income and on Capital without defined, in Articles10,11and12, in1977, and almost ever since the question has been:"What does it mean?" The later bilateral tax treaties followed the Model Convention with Respect to Taxation on Income and on Capital, but unfortunately, almost none of them defined it. According to the Model Convention with Respect to Taxation on Income and on Capital, to avoid double taxation, resident of the other contracting state, who is qualified as the beneficial owner of the received income, could benefit from the bilateral tax treaty. However, this rule is abused by intermediaries, who shop the treaty through interposed entities, like agent, nominee, and conduit company. Therefore, it’s very important to determine who the beneficial owner of an income is, and it’s necessary to explore the history, interpretation and meaning of the concept of "beneficial owner".The full text includes three parts:introduction, main text and conclusion, and the main text divides into three chapters.The first chapter is "proposal and development of the concept of beneficial owner in international tax treaty". This chapter delivers a brief introduction of the proposal and development of beneficial owner by the method of historical analysis.The second chapter is "Interpretation of beneficial owner in international tax treaty". This chapter elaborates the general interpretation rules of beneficial owner under Vienna Convention on the Law of Treaties, and analyzes the influence of Commentaries on OECD Model Tax Convention and the Discussion Draft on the interpretation of beneficial owner.The third chapter is "analysis of the meaning of beneficial owner in international tax treaty". This chapter analyzes the character of the concept of beneficial owner, lists the non-beneficial-owners, and elaborates Clarification of the meaning of "Beneficial Owner" in the OECD Model Tax Convention and Revised Proposals Concerning the Meaning of "Beneficial Owner" in Articles10,11and12.The fourth chapter is "meaning and improvements of the rules of beneficial owner in tax treaties signed by China and other States". This chapter illustrates the rules and existing problems of the concept of "beneficial owner" in tax treaties signed by China and other States. The author also raises four proposals concerning those problems based on the international fiscal meaning of beneficial owner.The innovation of this paper lies in three following aspects. First, this paper makes an introduction of the newest development of "beneficial owner" in international tax law. Second, this paper clarifies the basic questions of beneficial owner through the latest developed cases:(1) the relevance of domestic law in interpretation of beneficial owner;(2) the relevance of Commentaries on OECD Model Tax Treaty released after the signature of tax treaty;(3) whether economic substance is vital in determining beneficial owner;(4) whether the concept of beneficial owner has an international fiscal meaning. Third, the author raises some advice on the rules of beneficial owner in China based on the latest development of the concept of "beneficial owner".