Studies Of Taxing Right To Indirect Transfer Equity Of Non-resident Enterprise In China

Indirect transfer of equity of non-resident enterprise is not only a hot topic butalso a great dispute in the field of international taxation at the present.In recent years,transnational investment activities between non-resident companies is dynamicincreasingly, because the equity transfer value income has become main return oninvestment. There are taxation of nonresidents in the complex international investment,so the indirect transfer of ownership patterns gradually being adopted by more andmore multinational investors. However, for this phenomenon that non-residentcompanies through overseas affiliated company transfer equity, tax authorities inChina often judge it tax avoidance without reasonable commercial purpose, thenaccording to substance over form principle to stand for the taxation power on equityincome.Through the collection and analysis of current situation，we found that taxauthority focus on the principle of economic presentations, and applied it to taxpractice directly, lacking to grasp the essence of the taxation principle from the actualcases. In terms of whether a non-resident enterprises have commercially reasonablepurposes. The Chinese tax authority lack of available tax regulations, through researchof new Enterprise Income Tax Law the general anti-avoidance provisions anddocuments related laws and regulations, China did not define criteria and principles ofreasonable commercial purpose clearly. Because of these problems, there are a lot ofcontroversies about the right to tax indirect transfer between the non-residentcompanies, mainly in the legal basis of the fragile and reasonable commercial purposesidentified two aspects. Based on the domestic classic case of indirect transfer ofownership comparison assessment, this article referenced international legislation andpractical experience to draw some meaningful inspiration for the indirect transfer ofnon-resident enterprises, looking forward to it will helpful for the non-residententerprise indirect transfer equity anti-avoidance working in the future.