Research On "Beneficial Owner"

In order to obtain financial income to meet the needs of the social public, the country relies on its political and public power to levy tax forcibly, to allocate the social surplus products. At first, the object of taxation is confined within a nation’s scope. With the continuous progress of productivity, the increasing number of commodity exchanges, and the sprout of capitalist economy, the capitalist countries export capital to the other countries, which promote the development of international investments and trades. The multi-national corporations have become the main force in the economic globalization, which promote the circulations of funds, technologies and talents in the world. Such global expenditure and income make the international tax become inevitable. In order to protect its own revenue and economic benefits, each country increasingly levies tax from international investors.However, the difference of tax systems and the difference of jurisdictions may lead to the problem of the double taxations. In order to promote the mutual economic links, to clear the tax and jurisdiction, each country starts to sign the agreement of the international tax. Based on the exchanges of the talent, currencies and commodities, the contracting parties tend to give some preferential tax treatment with each other, which is lower than the rate of domestic law. In order to pursuit the economic interests, some non-contracting taxpayers make up as the residents of contracting country and extract the special treatments, which influence the tax revenues of some countries, lead to the abuse of the international tax agreement.In order to prevent the abuse and the unity of the tax agreement, OECD and UN cite the “beneficial owner” system to the relevant model tax conventions respectively. These conventions and comments become the references for many countries. However, such conventions and comments have never made any clear definitions to the concept of “beneficial owner”, and never reduced any differences and difficulties in the application. Not only scholars but also the courts and judges in one country have many different views on this concept.With the development of the china’s reform and opening-up and the improvement of transnational economic proportion, the applications of the identification are growing. However, tax authorities are in dilemma without the standards. Since 2009, the State Administration of Taxation issued several documents, such as [2009] No.601, announcement [2012] No.30 and [2014] No.24. These documents clear the developments of “beneficial owner” in our country, which play a great role in defining the “beneficial owner”.This article has three parts, which includes introduction, main text and conclusion. The main text is divided into four chapters.The first chapter: Overview of the “beneficial owner” system. Firstly, this chapter introduces the origination and process of beneficial owner system, which originates from the trust of Anglo-American Legal System, develops from department of law to the field of international law. After being introduced to Model Tax Convention by OECD, “beneficial owner” is gradually adopted by many countries, in order to prevent the abuse of the Model Tax Convention. Secondly, this chapter tries to define the concept of “beneficial owner”. Because OECD and revisions have no specific definitions, different courtiers used to refer to their domestic laws, and scholars have many different views on this concept. The tax authority in our country gives the general definition to the concept of “beneficial owner”, and lists several negative conditions. At last, it points out the significance of the establishment. Not only can it protect the tax benefit, but also can maintains the good international environment of competition.The second chapter: the practice about the “beneficial owner” system in foreign countries. This part mainly introduces the practice of beneficial owner system in the Anglo American law system and continental law system. Through specific cases, we can understand the identification standards of "beneficial owner" in various countries. The countries of Anglo-American Law System are used to adopting substance rather than format to explain the “beneficial owner”. In the case of Indofood International Finance, the British court explains “beneficial owner” at the first time and emphasize the way of economic essence rather than limited to the legal or technical level. We should pierce the veil of camouflage and put the end to the abuse of the Model Tax Convention. In the case of USA, the court also applies the principle of the substance to define the concept. However, the countries of continental law system are used to comprehending the concept based on legal perspective and explain it literally.The third chapter: the regulations and tax practice about “beneficial owner” system in our country. The document [2009]No.601 regulates the concept of “beneficial owner” for the first time and enumerates seven factors which is not conducive; The announcement [2012]No.30 points out that we should base on “the substance rather than format” to identify the “beneficial owner”, sets the “Safe harbor rule”, and emphasizes “It is forbidden to making the negative or positive identification by the specific negative factor.”; The announcement [2014]No.24 rules the “beneficial owner” under the circumstances of Entrusted Investment and make the detailed provisions about procedure. This chapter also introduces the case of Qingdao in 2012 about the identification of the “beneficial owner”, which saves tax of about sixty million.The forth chapter: the problems and the solutions of “beneficial owner” system in our country. According to the regulations and tax practice about “beneficial owner” system in our country, points out the problems of the low level of authority files, indistinct rules, the own limits of tax authority itself, and so on. This chapter also suggests some relevant responses.