| After the World War II, many western countries came to use the Deferral taxpolicy to ensure their enterprises’ relative competitive position in the worldwidecompetition. Due to the existed difference in tax rate and tax policy of every country,many multinational companies began to abuse the Deferral to arrange tax-avoidanceactivities. In United States, as a capital-exporting country, this phenomenon was thenworsening. In1962, the government of US founded a anti-avoidance rule to constrainthe abuse of the Deferral, which is called CFC rule, short for Controlled ForeignCompany. By now, most members of the Organization for Economic Co-operationand Development have founded their own CFC rule, according to the basis of theAmerican’s CFC rule. In China, the similar regulation was presented in the new Lawon Corporate Income Tax and in the implementation enacted in2008. Then the secondyear, the concept of Controlled Foreign Company was proposed formally in theSpecial tax adjustment measures, which indicates the Criteria, calculation method andexemption. Compared with the CFC rule of the western developed country, theChinese’s provisions are too general, which might cause the dispute on its application.This article focuses on the application of the Chinese CFC rule, based on theconfirmation of its taxpayer and the taxable objection. The study results that theChinese CFC’s problem can be divided in two types: one is that the provisions aredescribed too generally to comply without concrete standard, the other one is thatextend is limited so the CFC couldn’t constrain the abuse of Deferral effectively.Accordingly, this article presents some suggestion. To concrete the principle, itcan refer to the US and Australia’s experience to definite the effective control;through the estimation of substantial economic to determine the reasonable businessneed. To extend the coverage, the constructive ownership and the adoption of CFC inthe Law of Individual Income are recommendable. |
