Analysis On Law Problems Of General Anti-avoidance Rule

Taxation is a method that a country in order to achieve its functions and obtain financial income in accordance with statutory standards. It is also a particular distribution relationship formed by the country’s political right to participate in the distribution and redistribution of national income. On the one hand, taxation is the main revenue of one country, it is the main financial guarantee for the country to meet the public demand. On the other hand, taxation also allows the country to use policy instruments to guide the economy, it can conducive the rational allocation of social resources. However, with the society development, the competition in the market economy is becoming fiercer, some people try to get more economic benefits by escaping from taxation. This behavior damage the national tax and undermine the equality between taxpayers, it is also lead to the reduction of government revenue and undermine the integrity and fairness of the tax system, all countries in the world try to regulate these behaviors effectively. In all this kind behavior, the tax avoidance is a unique phenomenon in the market economy. If the government only relies on tax law to describe in the external features of tax avoidance, it will not only cannot play an effective regulatory role, but also lead to tax law become lengthy and complex.This paper first of all intends the implications and characteristics of the general anti-avoidance rule, found that as a result of the general anti-avoidance rule is not aim at any particular taxpayer or behavior, but put the avoiding of tax liability as the ultimate goal. In this way it extends the scope of the tax law and effective regulate those tax plans which surface do not violate the tax law but actually evade the tax payment responsibility. Therefore, the purpose of general anti-avoidance rule is to make up for those loopholes in the special anti-avoidance rules, so that the tax law can regulate all of the tax avoidance behaviors. As a regulation for remedy of tax law, the general anti-avoidance rules have become one of the main measures of anti tax avoidance in most countries.Secondly, through the analysis of the applicable conditions of the general anti-avoidance rule, we can know that the general anti-avoidance rules does not have any clear applying conditions. The tax authorities need to consider the nature of the taxpayer’s behavior in specific cases, then decide whether the general anti-avoidance rule investigation start or not. Together the judicial practices in UK and USA, we can find that the applicable conditions of general anti-avoidance rule can be summarized in the following three aspects:first, the taxpayer intends to arrange the tax plans; second, the tax planning brought to tax benefits taxpayers:third, taxpayers’ subjective purpose of tax planning is to obtain tax benefits. These three conditions are inter-relating and increasing progressively sections. After studying these three applicable conditions, we can know that although the general anti-avoidance rules can effectively combat and curb the acts that violating the legislative intent of the tax law, but as the general anti-avoidance rule is miscellaneous provision, it’s vagueness of the words does not conform to the certainty of the law. This problem will also bring some inconvenience to the tax authorities in the process of application. In addition, in determining the taxpayer’s subjective purpose the tax authorities need to considerate various factors, as a result of this judgment depends on the subjective inference of law enforcement, the tax authorities have broad administrative discretion power. In practice, it may lead to improper use of powers of the tax authorities that may harm the interests of taxpayers.Finally, this paper analyses the current situation of China’s general anti-avoidance rule. Based on the special development of China’s market economy, China has a late start in the general anti-avoidance problems. No matter in the formulation of legal provisions and the relevant judicial interpretations, or in the application of specific cases, our general anti-avoidance rule has a lot of problems need to be solved. Therefore, China should actively learn from the experience of other countries based on the basic national conditions, and improve the relevant provisions of general anti-avoidance rule, in order to effectively combat tax avoidance behavior, maintain the orderly conduct of economic activities and promote the stable development of China’s tax system.