On The Legal Regulation Of The Abuse Of Tax Treaties

The original intention of signing tax treaty for sovereign states is to avoid double taxation and reach an equitable distribution of benefit of taxation amo ng states. However, profit maximization is what most enterprises pursue, so the y always seek the qualification to apply favorable tax rates by improper means, and abuse of tax convention is most common one of them. Nowadays, the st ates with faster developed economy have established mature system, especially the Limitation on Benefit provision and the Beneficial Ownership provision in the OECD Model Convention on Income and Capital. Although our country's r egulation on this aspect began to arise in recent years, there are still a lot of problems in these laws and rule.There are four chapters in this paper. Chapter1 analyses the exact definitio n of abuse of tax convention, and summarize the ways of abuse. Chapter 2 an alyses the necessity and legal ground of avoid tax treaty abuse, and summarize s the general principles and legal basis. Chapter 3 introduces the methods targe ting at tax treaty abuse, including the Beneficial Ownership provision and the Limitation on Benefit provision. In addition, introduce the regulations on invest ment in foreign countries and investment from foreign countries, which are sim ilar to the anti-tax avoidance. Chapter 4 summarizes the problems exist in prac tice and recommend relevant advises based on successful experience of USA a nd OECD.