Treaty Abuse And Preventive Measures

The international tax treaty is a written agreement signed between the States for the purpose of coordinating the tax rights and interests between each other and dealing with tax issues.The international tax treaty is an important way to solve the problem of double taxation,to coordinate the international tax distribution,to promote international tax cooperation and to solve the international tax disputes.With the continuous expansion of Chinese tax treaty network and the increase of cross-border economic exchanges,the phenomenon of treaty abuse is also increasing.Treaty abuse especially treaty shopping has become one of the most important reasons for base erosion and profit shifting;treaty abuse not only damages the contracting states'tax benefits,but also contrary to the object and purpose of tax treaty to provide tax preference.Treaty abuse also damages International Taxation order,so it is important to prevent it seriously.Based on this circumstance,the author hopes that China can response to BPES appeal with positive actions,adopt the recommendations of the OECD and learn from foreign countries' rich practices of addressing treaty abuse.We can establish legal system of countering treaty abuse from the level of domestic law and tax treaty.Specifically,first,this paper will introduce the concept of treaty abuse,the types of treaty abuse,factors inducing treaty abuse and the damage of treaty abuse;secondly,the paper will analyze the shortcomings of traditional measures to prevent treaty abuse from the domestic law,tax treaty and other possible aspects;Then this paper will introduce the latest development of the BEPS program on the prevention of treaty abuse,mainly analysis LOB article and PPT article,also including some other measures;Thirdly,I will analyze the practice of preventing treaty abuse in our country,and point out the existing problems;finally,this paper presents concrete suggestions on perfecting our mechanism to prevent treaty abuse,and hopes that it will work well in countering treaty abuse.