Study On Income Law Issues About〝employee Stock Held Nominally By Corporate〞

In our country, since Deng Xiaoping made his southern speech in the 1990 s, enterprise shareholding system reform gradually become the mainstream of the reform. At the same time, employee stock ownership plan(including the "employee stock held by corporation") came into being and developed rapidly. Although stop was put to ESOP in the history, after the third plenary session of 18 which puts forward a proposal "to allow the mixed ownership economy by employee shareholding, forming a community of interests within the capital owners and workers ", ESOP embraces a good opportunity for development.ESOP canˊt smoothly develop without the regulation of the tax law, as well as "employee stock held by corporate". The income from "employee stock held by corporate" can be divided into two kinds, one kind is dividend、bonuses during the stock –held period; the other is the income from stock-transferring. To tax on the above income, the personal income tax law and enterprise income tax law shall be applied, including concreting tax object, tax payer, the tax base, tax rate and other taxation elements, and who shell be the taxpayer is most important.In general, taxpayers have no objection to the tax authority about tax liability subject, as the taxpayer’s economic activities are traditional, taxpaying subject in the form is consistent with the taxpaying subject in the essence. But "employee stock held by corporate" is not, its taxation elements in the form are always different from its essence. So when confirming income tax payer occurs two opposite views: one is that tax elements should be strictly confirmed according to the legal form, which is consistent to the usual practice of the taxation authority; The other is tax elements in the essence should be pursued. These two kinds of views are completely different on taxation elements identification, the former thinks form is over substance, while the latter believes substance is over form, when taxation elements in the forms are different from the taxation elements in the essence. As the authorities tax the income of "employee stock held by corporate" according to taxation elements in the forms, the corporate and employees are both taxpayers. This brings double taxation issues, the employee as the true investor not only pay individual income tax, but also assume the enterprise income tax(for generation, the corporate is only a platform not actually running, the enterprise income tax is actually burdened by the staff). So, the employees hope the substantial taxation principle can be applied. After all, if applying the principle of substantial taxation, employees will not burden too high tax. But, as our country limit the scope of substantial taxation principle in the field of tax avoidance and anti-avoidance, and in order to respect the legal taxation principle, the applicable conditions of substantial taxation principles should be made in law in advance. Therefore, substantial taxation principle is not suitable to "employee stock held nominally by corporate".Since "legal form is different from substance" exists in "employee stock held by corporate" as well as tax avoidance, and substantial taxation principle is applied to tax avoidance which results the loss of national tax revenue, why not apply substantial taxation principle to "employee stock held by corporate" ? Since Tax Law pays attention to national tax revenues but also to taxpayer rights protection, and substantial tax principle can effectively avoid dual taxation realizing fair tax, why not confirm the staff be the only taxpayer in the arrange of "employee stock held by corporate" ? The application of substantial taxation principle to "employee stock held by corporate" will violate the legal taxation principle or not? The substance is economic or legal? The application will violate the stability of the civil and commercial law or not? Those problems need be solved. Putting the above questions as the research train of thought, combining case research method with theory, systematic and specific investigation will be given to income tax issues on "employee stock held by corporate".In addition to the introduction and the conclusion, this paper is combined of 4 parts. The methodologies of case analysis and comparative analysis are adopted to explore the disadvantages of formalism which exists in "employee stock held by corporate", and on this basis, the proposal of applying substantial taxation principle as the resolution is put forward other than the introduction of preferential tax policies.Chapter 1 examines two different principles, etc. substantial taxation principle and formalistic taxation principle. Besides, this chapter introduces the concept、character and comparison of "employee stock held by corporate".Chapter 2 including 3 quarters centers on the "employee investment collection plan" of China Peace Group. First quarter recounts the case, and analyses the income tax burdened by Ping Anˊemployees. Second quarter makes a through inquiry about income tax law issues on "employee stock held by corporate" with comparative analysis method, etc. the staff burdens dual and heavier income tax. Third quarter probes the reasons of the above problem.Chapter 3 centers the theory. Chapter 2 explains the formalism brings double taxation and injustice tax burden to "employee stock held by corporate" mode, giving applicable needs to substantial tax principles. But whether it is feasible, further analysis should be given. This chapter is divided into four sections. The first quarter analyzes the current applicable scope of substantial taxation principle, trying to prove "employee stock held by corporate" have reason to apply the principle of substantial taxation as the country is equal to the taxpayer; The second quarter explains the application of substantial taxation principle to "employee stock held by corporate" is consistent with tax revenue legal principle. After that, this paper discusses the substance is economic. The last quarter illustrates the stability of private law is not the sufficient reason to obstruct the application of substantial taxation principle. There are two arguments: first, the tax law is relatively independent of the civil law. Even if the substantial taxation principle destroys the stability of the private law, the use of substantial taxation principle can’t be effected; Second, substantial taxation principle dose not destroy the stability of the private law, so there is no stance to obstruct substantial taxation principle.The fourth chapter puts forward the method to solve the problem that applying the principle of substantial taxation on the basis of previous research and analyzing. This chapter is divided into three quarters. Quarter 1 restores the applicable scope of substantial taxation principle, suggesting substantial taxation principle should not only apply to the field of tax avoidance, it is also suitable for the situation good for taxpayer when the form departs from the essence; Quarter 2 presents advice on how to concretely implement substantial taxation principle. Quarter 3 compares the legal result of substantial and formalistic taxation principle after being applied to "employee investment collection plan" of China Peace Group.This article tries hard to realize two aspects of innovation as the following: one innovation is about the research method, this paper creatively uses case study method and the comparative analysis method to research "employee stock held by corporate" income tax law issues; The second innovation is about the method to solve the issues, this paper creatively recommends to apply the principle of substantial taxation to solve the problem. But due to lack of theory and analysis ability, the depth of analysis needs to be improved.