Case Research Of The Comparison Of Anti-avoidance Measures For Indirect Transfer Of Equity In Non-resident Enterprises

With the development of economic globalization,non-tax-resident enterprises begin to apply the differences of tax system and management of every countries and districts to operate the global tax avoidance plans for profit maximization.These actions erode the tax base of sovereign states severely and have disadvantage effect on global resource allocation.Under these circumstances,the multinational capital based on the transference of equity and other equity asset flows more and more frequently,the behavior of tax avoidance with regard to non-tax-resident transfer equity indirectly has aroused wide concern gradually.In the present,our country mainly applies to the substantive taxation principle of anti-tax avoidance to rule the tax-avoidance behavior of non-tax-resident to transfer equity indirectly.In the case ‘Heilongjiang Jiamusi',the tax authority first time applied to the concept of tax resident enterprise to oppugn the essential of the behavior that overseas non-resident enterprises transfer equity indirectly,collected business income taxes successfully and becomes the new action to rule non-resident enterprises to transfer equity indirectly.In summary,our country mainly apply to the above two action to rule the tax avoidance behavior of non-resident enterprises to transfer equity directly.Due to the business structure of the transference of equity of non-resident enterprises is very complex and covert,there has not specific rule about the application of two behaviors of tax avoidance i.e.the application situation of different anti-tax avoidance actions and the differences of cases.Though the anti-tax avoidance rules of non-resident enterprises transfer equity indirectly become more and more consummate,the rules still stand behind the reality extremely.The actions of anti-tax-avoidance still have many demanding prompt problems.For example,in our country,the tax authorities judge if the actions of non-resident transfer equity belong to the tax-avoidance actions by subjective substantive taxation,i.e.whether the businesses have reasonable commercial aim.However,there hasn't made final conclusions of what is reasonable commercial aim and how to figure out the factors to judge reasonable commercial aim.For other instances,there haven't had specific rules in our legislation about how to distribute the burden of proof and regulate the discretion of tax authorities when judging whether the business violate subjective substantive taxation.What's more,it worth researching that there has many problems about the identification of tax-resident enterprises and follow-up management when operating the actions of tax-resident enterprises concepts.The problems about anti-tax-avoidance actions always interrupt theoretical and practical circles and lead to the consideration of me and become the opportunity to write this article.In this article,the comparative study on the tax-avoidance actions of non-resident enterprises transfer equity indirectly combined with empirical research,comparative analysis and other research methods.In addition to the introduction and conclusion,the article is divided into three parts.The first part and the second part are in the form of case analysis to make a research on the typical cases respectively apply the above two different kinds of anti-tax-avoidance measures to explain the main measures of non-resident enterprises transfer equity and possible and urgent problems.According to the analysis,I provide legal advice to our tax authorities to carry out anti-tax-avoidance work.The third part is the comparative analysis of the above two cases,in order to provide practical basis for the application of the rules of non-resident enterprises transfer equity.Chapter one begins with a typical case “child's investment found case” which has been judicially reviewed by Supreme People's Court,mainly discusses means of anti-tax avoidance applicable to essential canons of taxation.Nowadays,refers to rules of anti-tax avoidance means applicable to essential canons of taxation,it focuses on subjective requirement of essential canons of taxation,that is to say if it has reasonable business purpose to determine behavioral nature of the transaction,but in aspect of laws and actual operation,many problems are existing.First of all,what is “reasonable business purpose” and “how to determine if it has reasonable business purpose” are still vague,although No.7 announcement introduces eight consideration factors,it doesn't specify whether any one of the eight considerations may be element or the unity of the eight considerations may be element,the author thinks it is appropriate to consider the eight elements as the only element to make a determination.Secondly,refer to procedures,there is no specific regulations on how to assign burden of proof of Non-resident enterprise's indirect transferring shares transaction for tax avoidance,but in practical trial,the court requires probative force of proof,therefore,it is necessary to specify the above contents.At last,determination to “reasonable business purpose ” has always been unilateral,tax authorities has absolute dominance and major discretion,the author thinks that to some extent restricting discretion of tax authorities,and granting taxpayer some rights of defense in revenue procedure to prevent abusing power of taxation can accomplish unification of personal interests and national interests.Chapter two starts with “Jiamusi case in Heilongjiang”,in that case,tax authority in our country first used anti-tax avoidance means of tax payable residents enterprise concept,by querying the nature that foreign non-resident enterprises transferred shares,affirmed foreign enterprises were domestic tax payable resident enterprises,so that successfully collected corporate income tax.Although that case developed a new view to anti-tax avoidance for tax authorities in China,breed new means of anti-tax avoidance,but there are many problems in actual operation,for example,judging standards of tax payable resident enterprises is incomplete,follow-up management of tax payable resident enterprises is ambiguous,it is difficult to collect tax and obtain evidence,and it is risky to collect tax.In order to apply the anti-tax avoidance means,the author thinks other kind of “ judging standards of actual management agency” of non-resident enterprises shall be supplemented completely in respect to legislation,improve which is identified to be follow-up management system of tax payable resident enterprises,prior register system shall be established,cost for tax authorities to investigate and obtain proof shall be decreased to some extent,and difficulties for tax authorities to obtain overseas proof shall be decreased,so that tax risk will be decreased.After analyzing the above mentioned two typical cases concern with anti-tax avoidance means,Chapter three will study the two cases through comparison.Firstly,researches and discusses mutual problems of the two cases,both of the above mentioned two cases refer to non-resident enterprises indirectly transfer stock rights to avoid tax,when regulated them through anti-tax avoidance means,there were many problems such as legal system was incomplete,it's difficult to obtain collecting and managing information,lack of professional person to collect tax and mange tax.Secondly,analyzes special issues of the two cases.The above mentioned cases are typical anti-tax avoidance cases that non-resident enterprises indirectly transfer stock rights,but tax authorities use extremely difficult means to regulated when investigated and dealt with the two cases.Thirdly researches and discusses the reason why the two similar anti-tax avoidance cases use different means of regulations.At last,synthesize mutual problems and unique problems of the two cases,to present feasible suggestion which applies to means of anti-tax avoidance and develop work of anti-tax avoidance.Through case analysis and comparative analysis,this paper dissects non-resident enterprises indirectly transfer stock rights to avoid tax,its innovations are: first,use anti-tax avoidance case judged by the Supreme Judicial Court,start from practice,discover problems of anti-tax avoidance means of essential taxation principle in assignment of burden of proof and probative force of proof.Combines practice of law enforcement of judiciary,present feasible suggestion which meets actual requirement;secondly,combines with the latest laws and regulations of anti-tax avoidance in China,mainly analyzes problems which are required to be specified in No 7 announcement,presents more meticulous suggestions to judge “reasonable business purpose”;third,our country firstly apply the concept of tax payable resident enterprises,and overturned overseas enterprises' behavior of tax avoidance,through the two successful cases,introduces how to use anti-tax avoidance means to anti-tax avoidance,the research method is vivid image,entry point is novel;Fourth,based case analysis,comparatively analyzes the two cases,through which we can obtain applicable conditions and improved suggestions of different anti-tax avoidance means,it has major practical value.