Study On Legal Issues Of The Round-trip Investment Supervision

In2012,24925foreign-found enterprises have been established and the amount of actualuse of foreign direct investment have been to111.716billion USD. The introduction offoreign capital has been being one of the important contents of China’s reform andopening-up. With the deepening of reform and opening up, it will further accelerate the paceto use international capital in China. But behind the large amount of foreign capital, there aremany potential problems. According to incomplete statistics, about20%of the foreign directinvestment is the round-trip investment by the form of off-shore company, leading to foreigninvestment foam and increasing the market risk in supervising and control. The existing ofround-trip investment has its own reason. Round-trip investment by the form of off-shorecompany could reduce the tax burden, evade supervision, complete overseas financing andprotect property. Round-trip investment by the form of off-shore company is a double-edgedsword to society. On one hand, it is conducive to enterprise development and provides a newoperating mode for the enterprises; on the other hand, it also increases supervising difficultyof governor. The supervision of round-trip investment in China started relatively late, and theexisting supervision system is still not comprehensive and full of application conflict and lackof implementation details. This paper, from the perspective of enterprise development,attempts to analyzes some problems in the process of the round-trip investment andinsufficient for the existing regulatory system, and then from the dialectical attitude putsforward a sound proposal to China’s supervision system.International capital uses the form of off-shore company to conduct international taxavoidance, which reflects the fierce competition among countries and the loophole ofinternational tax system and the issue of international investment supervision. Theinternational capital operation involves inter-regional and cross-border scope, so the range ofsupervision authority becomes an outstanding problems in applying legal supervision. Thereis also a another practical problem in the round-trip investment--the foreign exchange regulation. The frequent flow of funds in the round-trip investment increased tremendouswork pressure to the foreign exchange regulator, especially Off Shore Company’ financesecret for the outside world, increasing the risk of the imbalance of international payments.This paper, in view of the above two problems, with theoretical analysis method, comparativeanalysis method, empirical analysis method, detailed analyzes tax available and supervisionof China’s international investment. Finally it puts forward some improvement suggestionsfor the legislation based on our country current situation.This paper discussed the issue of supervision system of China international round-tripinvestment through the analysis of the following four parts:The first part: To introduce the related theory and the present situation of round-tripinvestment. The round-trip investment is one of the important concept of capital operation anda special form of international investment. The round-trip investment usually takes the formof the Off Shore Company. This part will introduce the round-trip investment, Off ShoreCompany and other concepts, characteristics and related theories.The second part: To analysis tax avoidance in round-trip investment. Tax is one of theprominent problems in the round-trip investment, which often utilized some characteristics ofOff Shore Company’s international tax avoidance. In this part, it will firstly clear theconnotation and extension of tax avoidance, and then put forward to the Off Shore Companytax avoidance and regulatory measures, the comparative analysis of the foreign regulatorymeans, and introduced China’s current regulatory system.The third part: To analysis the foreign exchange in round-trip investment. The existenceof a large number of cash flow in the round-trip investment, by the Off Shore Company’scharacteristics of financial privacy, increased foreign exchange regulatory risk, increase thebalance of payments difficulties. This part first introduces the development history of theforeign exchange supervision system of Round-trip Investment and the existing system. Thenwith reference to the foreign regulatory system, it proposes the direction of choice for China’sfuture foreign exchange supervision mode.The fourth part: To perfect the round-trip supervision. Through theoretical analysis and international comparison of the above several parts, this paper sums up the faultless ofChina’s current supervision of round-trip investment and international tax avoidance. Finallythis paper puts forward improvement suggestions.