Study On The Standards Of The Concept Of “Beneficial Owner” In International Taxation

Most countries tax income on the basis of both residence and source. As a result, cross-border transactions may be taxed twice, both in the source country and in the country of residence. This phenomenon is known as “double taxation”. Countries may avoid this problem either unilaterally by legislation that relieves certain income from tax or bi-laterally(or multi-laterally) by entering double taxation treaties with countries with which they have trading or investment relationships. Tax treaties usually operate by partially, or fully, exempting dividends, interest, and royalties from withholding tax imposed by the source country. Treaty partners intend that treaty benefits should be granted to their residents, not to residents of non-contracting states. Moreover, they intend benefits to be granted to persons who enjoy the benefits, not to an artificial entity.Most countries that negotiate double taxation agreement follow the pattern of the model tax convention on income and on capital formulated by the Organization for Economic Co-operation and Development(Which will be referred to as “the OECD Model”). The provision of the OECD Model address the question of the qualification for benefits under the treaty. The system of “Beneficial Owner”, as an important standard to recognize resident status, is one of the most important concepts of international treaties. It prevents treaty shopping and extracting tax benefits and helps reduces the economic loss of the states. Most of the bilateral tax treaties used this term now. Countries like Netherland and England all have some related regulations about “Beneficial Owner” in the domestic law. China explained the concept and the standards of “Beneficial Owner” in file No.601 and made some further explanations in public announcement No.30, They guide the tax practices successfully, but there are still some problems in the identification of “Beneficial Owner”.This thesis studies comprehensive and systematic on the term “Beneficial Owner” and is divided into three parts. The first part is a summarize of the “Beneficial Owner” system, it contains the historical origin, the recent development and the concept of “Beneficial Owner”, and then analyses the various differences on the identifying criterion. The second part is about the regulations and practical experience of the standard of “Beneficial Owner” in Netherland、England and Canada, it will analysis and evaluate the cases. The third part is about the identification and suggestions in China. It states the definition and the standards of “Beneficial Owner” in China, then explores the file NO.601 and public announcement NO.30, and make a comparisons between file NO.601 and the OECD model, so we can see the differences in beneficial owner system between China and other countries. And then introduce the case of taxation practice in China, analyses the application of the concept of “Beneficial Owner” further. At last, by analyzing the problems of “Beneficial Owner” standards in China, make some suggestions with the consideration of China. This part is the core concepts of this thesis.The significance of this thesis is to analyze the standards of “Beneficial Owner” from an international perspect by introducing the relevant regulations of the OECD Model, foreign countries and China. It also raises deficiencies and try to give some suggestions, hoping that these suggestions can guide the practice of our country better in the future.