The Corporate Personality Denial System In The Indirect Equity Transfer Of Non-resident Enterprises

The corporate personality negation system is relative to the legal concept of corporate independence.Corporate personality negation system,also known as the denying of corporate personality system,first came in the United States in the early twentieth century,in the case of United States v Milwaukee Refrigerated Transport Company,the Judge Sanborn's decision indicated the formally establishment of the corporate personality negation system.The corporate personality negation system is established to deny the independence of the company,to limit the liability of the shareholders and to prevent the abuse of the independent personality of the company which can confirm the legal personality of the company.Creditor or public interests is directly responsible for the legal system.China's revised Company Law clearly stipulates the company's personality denial system.Article 20,Paragraph 3 provides that "If the shareholders of the company abuse the corporate legal status and shareholders' limited liability to evade debt,and seriously damage the interests of corporate creditors,they should bear joint liability for corporate debt with the company itself." This marks that the company's personality negation system is basically structured and the content is almost completed.It establishes the principle of independence of corporate personality and the limited liability of shareholders,and provides the abolition of the rights of shareholders,and also clearly stipulates the legal consequences of the abuse of rights by shareholders.As early as the year of 2008,the State Administration of Taxation of China denied the cases of tax declaration by Singapore Holding Company.This is the first time that the principle of corporate personality negation system has been applied in the field of anti-tax avoidance.In order to deal with such domestic tax avoidance cases and to end the stream of tax avoidance,the State Administration of Taxation issued a document named No.698 in December 2009,which indicates the formal establishment of the corporate personality negation system.Before the corporate personality negation system,which is treated as a specific system was written into China's tax law,it has experienced a lot of theoretical circles.However,compared with the introduction of the specific system,it is undoubtedly a wise move.Moreover,based on the requirement of international anti-tax avoidance,it is of special significance to establish the system of corporate personality denial in China's tax law.It is based on the principle of tax credit and debt and the principle of fairness of taxation.It has sufficient rationality and legitimacy,and can be well rooted in the legal soil of our country.It has a lot of similarities with the corporate personality denial system and the substantive tax principle in the tax law,but also has its own characteristics.As a special tax law system,the State Administration of Taxation should be modest when they apply this system.Although the current tax law has clearly stipulated that China's tax authorities can use the company's personality denial system for anti-tax avoidance activities,but the domestic tax law on the scope of the system is not clear,and even some cases can only be resolved by the issued individual cases of State Administration of Taxation.The current system cannot cope with the vagaries of corporate tax avoidance behavior.Therefore,it is necessary to combine the specific cases to illustrate its scope of application and better clarify the scope of the system,which can give a more specific direction of the domestic tax authorities for anti-tax avoidance activities.