Research On The Legal Issue Of Taxation On Individual Income Of Cross-border Service

With the further development of economic globalization, the flow of various factors of production is becoming increasingly frequent. As one of the most important factors, human resource will inevitably follow this trend. When the cross-border flow of labor continues to increase, it may cause problems that lies in how to tax on these kind of income, namely how to attribute the tax levying authority between the resident state and the country of source. China is also facing the problem now, especially with the rapid economic development. The demand for talents continues to grow, more and more foreigners began to looking for opportunities in China. Whether can we handle the issue of taxation on income of personal cross-border service is not only related to the maintenance of tax benefits, but also affect the introduction of the talents of our country, which will affect the economic development of China.Currently the relevant provisions of both the domestic tax law and the bilateral tax treaties in which China has signed constitute our system for handing the problem of taxation on personal cross-border service income in China. But there are still some problems either in the relevant provision of the domestic tax law or in the terms of bilateral tax treaties, and there are also a lot of conflicts in the course of operation of these two different sets of rule systems. Based on the analysis of the relevant provision of tax treaties and domestic tax law and the resulting on which tax treaties impact domestic tax law, the thesis will reveal some of the deficiencies of the existing system, and hold that the government should insist on resource jurisdiction priority and taking into account of the residence jurisdiction at the time of singing international tax treaties in the future. Moreover, arbitration mechanism should be brought into coordinate the disputes and conflicts between international treaties and domestic rules. The thesis still indicate that the relevant provisions of the domestic tax law should be revised, the “imputation method” should be taken to judge whether the remuneration is borne by the permanent establishment, and the “days of physical presence” method should be taken as the only way to calculate the 183 day period. Seeking to address this issue, and suggest on cleaning up the existing relevant tax document and eliminating the conflicts between different documents.The thesis consists of six parts, and the main contents are as follows:Part one explains the “service” in domestic tax law and the “cross-border service” in international tax law, and explore the crux of the difficulties in taxation on income from cross-border service. In view of this article, the difficulties are embodied in the inconvenience for the supervision and the allocating of taxation jurisdiction between source country and residence country.Part two gives some theoretical bases for China taxation on income from cross-border service as a sources country from the perspective of political science, economics and law. Then it put forward that China should insist on the principles of tax allocation fair, equitable burden and tax neutrality.Part three combs the rules applicable to taxation on income from cross-border service in current individual income tax law through the aspects of identification of service income, identification of source of income and exemption rules.Part four introduces the method of coordinating the conflicts in taxation on income from personal cross-border service at the international level and expound the impacts that current international coordination rules has on domestic provisions.Part five points out the problem in rules of taxation on personal cross-border service income, as follows: the coordination rules can’t eliminate the conflicts between contracting states completely; rules of identifying the resident status of employer and identity of partnership are unreasonable; some provisions of domestic law are contrary to the legislative intent; conflicts exist between different tax document and the lacking of systematic in current tax law.Part six summarizes the coordination rules of international tax law tend to the trend of fair and simple gradually at first. And then it gives some suggestions. On one hand, in signing tax treaties in the future, China should insist on resource jurisdiction priority and taking into account of the residence jurisdiction, bring in arbitration mechanism, and revise the disputable rules. On the other hand, China should revise domestic tax law, confirm the method of judging whether the remuneration is borne by the permanent establishment, adjust the way of calculate the 183 day period, and combed the current tax document systematically.