A Study On Legal Regulations On International Tax Avoidance Of The Offshore Company

After the Second World War,many countries gradually recovered from heavy losses and started commercial intercourses.Since then,the international trade started to develop.Since middle to late part of the 20 th century,information technology had a substantive leap.With the rapid development of Internet,the transporting ability between nations improved significantly.The development of international logistics and shared information urge the international investment and international trading between multinational cooperation to be even more frequent.Under such circumstances,many nations made every effort to attract foreign capitals to develop national economy.Some island countries that didn't have advantages in production,such as the British Virgin Island,the Bermuda Island,and the Cayman Islands,formulated preferential taxation policies.Not to mention their flexible registration requirements and strict confidential system.All those advantages add together made those island countries perfect places for foreign investors.International investors set up offshore companies in those regions.Although they had some international trades and helped the development of international economy to some extent,their primary purpose is to conduct international tax avoidance,thus reducing the government's financial burden and maximizing the profit.Such behavior not only gives rise to abnormal international capital flow,which makes host country and home country of investment suffer from tax erosion,but also harm the fairness of tax and market competition.International tax avoidance harms our country significantly.After the reform and opening-up,many foreign capitals came to domestic market.With the rapid development of China's national economy,domestic Cooperation also “opened up eyes” and started to make investments all over the world.By establishing offshore companies,our country suffers from large amount of tax erosion as the host country and as the home country,which has seriously damaged the interests of the country and people.Faced with this situation,every country and international organization formulated and perfected corresponding regulations.Different countries also enhanced cooperation about anti-tax avoidance through bilateral and multilateral agreements.Although our country has legislation about anti-tax avoidance,there is still some flaws.This article tries to analyze and study how developed countries and international organizations response to offshore companies,combining with national legislation condition,eventually come up with constructive advices about how to use legislation to regulate offshore companies' tax avoidance.Chapter one is more theoretical in this article.Firstly it makes clear the definitions of international tax haven and offshore company and expounds on their basic characteristics,then it outlines what is international tax avoidance of the offshore company and how offshore company avoids international tax.Making clear these most basic definitions is a transition to the following chapters.Chapter two primarily explains international legal regulations on international tax avoidance of the offshore company.Legal regulations on international tax avoidance of the offshore company are grouped into bilateral and multilateral.International bilateral cooperation regulated international tax avoidance of the offshore company mainly through the signing of bilateral tax treaty between countries.As regards international multilateral cooperation,this article mainly selects two organizations,the Organization for Economic Co-operation and Development(OECD)?the European Union(EU)and the G20,to analyze their legal regulations on international tax avoidance of the offshore company.Chapter three mainly selects America and Japan,two exemplary countries in the regulation of international tax avoidance of the offshore company,and conducts an in-depth analysis and study of laws,regulations and policies on international tax avoidance of the offshore company formulated by these two countries from the perspectives of controlled foreign company,transfer pricing and thin capitalization,and other rules.Chapter four is the key part of this article.This chapter first expounds on the current situation of legislation on international tax avoidance of the offshore company in China,analyzes and studies its shortages and defects,then proposes some sophisticated opinions and suggestions according to the above-mentioned international legal regulations on international tax avoidance of the offshore company and legal measures taken by countries like America and Japan based on national conditions of China.