A Study On Reviews Of Harmful Preferential Regimes In Action5:Final Reports

Base erosion and profit shifting is now a hotspot issue in areas of international taxation.In order to restrain this increasingly emerging issue,Organization for Economic Cooperation and Development released 15 action plans.From a perspective of harmful tax practices,the action 5 proposed substantial activity requirement of preferential regimes and spontaneous exchange framework of rulings,then considered Chinese high and new technology enterprise income tax preferential regime as a potentially harmful regime.Researching the content about reviews of preferential regimes will be of great significance for improving Chinese high and new technology enterprise income tax preferential regime,both theoretical and practical.On account of that,this article aims at conducting a discussion on reviews of preferential regimes that updated in the action 5.Apart from introduction,the article is divided into five parts,which includes content and standards of reviews of preferential regimes in BEPS action plan 5,methods of reviews of preferential regimes in the action 5,conclusions about reviews of preferential regimes in the action 5,recommendations for China by considering reviews in the action 5.Introduction mainly summarizes the whole situation of the article.This part,first introduces the background and meaning of the article,second,teases literature about harmful preferential regimes and BEPS action plans,finally,expounds the construction and innovations of the article.Part ?,setting as the bedding,mainly expounds content and standards of reviews of preferential regimes in BEPS action plan 5.Due to a reason that reviews of preferential regimes in the action 5 mainly inherit some rules from harmful tax practices,which involves the subject and framework of reviews and the measures related country can adopt,so this part endeavors to tease the content and standards that inherited from 1998 report,then presents the update of standards in the action 5.Part ? pays attention to the content of reviews of preferential regimes in the action 5,which is substantial activity and nexus approach.As the action 5 said,nexus approach is a method that FHTP used to apply substantial activity when they are reviewing a preferential regimes.While introducing how nexus approach is used,this part continues to analyse the application of nexus approach under IP regimes and non-IP regimes.By appraising substantial activity and nexus approach based details mentioned above,this part finds out that substantialactivity responses essentially the question why BEPS caused,in this way,substantial activity can restrain BEPS phenomenon,maintain resource allocation rationally in different economic activities,and is consistent with tax neutrality principle,but meanwhile burdens structure of tax system in related countries.Nexus approach maybe depart from its original intention with some inappropriate rules,such as IP outsourcing and acquirement.Part ? presents the conclusions about reviews of preferential regimes in the action 5.As the content of reviews of harmful preferential regimes is constantly updated,this part intents to neaten the conclusions about reviews of preferential regimes on account of the action 5 and OECD 2017 progress report.Since the action 5 considered all related regimes to be potentially harmful,including Chinese high and new technology enterprise income tax preferential regime,but changed altitude in 2017 progress report.The changing leads to a thinking about similarities and differences between the nexus approach and Chinese high and new technology enterprise income tax preferential regime.Part ? focus on Chinese relevant regimes.As mentioned above,the action 5 considered Chinese high and new technology enterprise income tax preferential regime as a potentially harmful regime.Aims at finding out the reasons,this part endeavors to analyse conformities and unconformities between nexus approach and Chinese high and new technology enterprise income tax preferential regime.As a result,Chinese high and new technology enterprise income tax preferential regime is consistent with substantial activity and inconstant with nexus approach.So in this part,a few recommendations are gived based on discussions above.