Research On “The Beneficial Owner” In International Tax Treaty

Taxation is a kind of compulsory and unpaid levy by the state with its political power.It is a means for the state to obtain fiscal revenue.The object of the initial tax is only a national of a country.However,with the development of productivity,the flow of goods and services has accelerated,and capitalism has begun to sprout.Capitalist countries began to export capital outwards and promoted economic globalization.Multinational corporations have promoted the circulation of capital,technology and talents around the world and have gradually played an important role in economic globalization.This internationalization of spending and income makes international taxation inevitable.In order to protect their financial revenues and economic interests,countries have levied taxes on the incomes obtained by transnational investors in their own countries.Because there are certain differences in the tax systems of various countries,and the areas under their jurisdiction are not the same,it is easy to cause the problem of double taxation,that is,the multinational taxpayers pay two taxes on the same income.In order to promote the development of the international economy,clarify the tax jurisdiction of each country and the income tax payable by transnational taxpayers,countries have begun to sign international tax treaties.In order to promote the flow of money,talents and commodities between the parties,the parties in the agreement often give the other parties some preferential tax treatment,usually setting a lower tax rate than domestic law.In order to seek economic benefits,some non-participating multinational taxpayers pretend to be residents of a Contracting State and receive preferential treatment from tax treaties,which affects the tax revenue of the source country,resulting in the misuse of international tax treaties.To prevent abuse and enhance the uniformity of tax treaties,the OECD model and the UN model each introduced the concept of “beneficiary owner”.These two templates and their annotations have become an important reference for countries to sign tax treaties,but they have not made a clear definition of the beneficial owners,nor have they reduced the differences and difficulties arising from the application.To this day,there is still no clear concept of benefit,and the identification of beneficiary owners varies from country to country,and even different courts or judges in the same country have different perceptions of beneficiaries in the same case.With the deepening of China’s reform and opening up and the increasing proportion oftransnational economic components,the number of taxpayers who apply for recognition as the beneficiary of the tax treaty is increasing,but the criteria for determining the beneficial owner are not clear,so the tax authorities often Difficult.In order to better guide tax practice,the State Administration of Taxation has promulgated a series of normative documents,such as Circular 601 issued in 2009,Announcement No.30 issued in 2012,Announcement No.24 issued in 2014,and No.9 issued in 2018.Announcement,etc.These normative documents define the concept of beneficiary owners and also clarify the criteria for determining the eligibility of beneficiary owners in China,which provides a significant guiding role for tax practitioners in relation to beneficial owners.This article is divided into five parts.The first part introduces the basic theory of the beneficial owner.First introduced the origin and development of the beneficial owner,the concept of the beneficial owner was derived from the Anglo-American legal system trust system,and was later introduced into the field of international tax law.The OECD introduced it into the agreement model and gradually used it for countries to prevent non-conformity.The abuse of tax treaties by third-country residents of the identity;followed by the introduction of the form of tax incentives for the abuse of beneficial owners,including the establishment of direct conduit companies and pedal stone catheter companies.Finally,the value of the beneficial owners of international tax treaties is elaborated.At present,the definition and recognition criteria of beneficiary owners are still uncertain.Therefore,the study of beneficial owners has certain theoretical value and practical significance.The second part first explores the interpretation of the concept of the beneficial owner.The Vienna Convention on the Law of Treaties has broad influence as a result of its prescribed interpretation and should be the general principle of interpretation by the beneficial owner.Some scholars and tax practice believe that they should be interpreted directly in accordance with domestic law,resulting in differences in understanding of the concept of beneficiary owners.Finally,the analysis determines whether the beneficial owner has an independent agreement law meaning.The third part introduces the two criteria for identifying the beneficial owner,namely the legal nature standard and the economic substantive standard,and then further analyzes the advantages and disadvantages of the two identification standards,and discusses the more reasonable judgment criteria when identifying the beneficial owner.The fourth part introduces the judicial practice recognized by the beneficial owner.According to the different certification standards,several classic tax judicial practices in the world are listed.Through specific cases,the standards for the identification of beneficiary owners are known.Common law countries often use the principle of “economic substance” to interpret the identity of the beneficial owner;while civil law countries usually understand it based on the legal level and strictly follow the literal interpretation.The fifth part introduces China’s current regulations on beneficiary owners,and then points out the problems and solutions to the Chinese beneficial owner system.In response to China’s relevant regulations on the system of beneficiary owners and tax practices,it is pointed out that there are still problems in the Chinese beneficiary system,such as low legal level,ambiguous regulations,and insufficient tax authorities.It is proposed that the legal hierarchy should be improved,the regulations should be clearly defined,and the tax authorities should be improved.Suggestions for own problems.