The Research On The Continuity Of Interest Doctrine In Special Tax Treatment

The economy of China is in a stage of rapid development.Companies need to expand their scale,improve their industrial structure and increase their competitiveness in the market through mergers and acquisitions.In China,the tax treatment of mergers and acquisitions is divided into general tax treatment and special tax treatment.The general tax treatment is taxable treatment,and the special tax treatment is not tax or tax-free.This is what this article needs to clarify.In addition,this article finds that there are still many imperfections in China's special tax treatment provisions,through analyzing process of the development of the continuity of interest doctrine and the difference between America and china.There are main three issues.First,the proportion of acquisition and equity payment in special tax treatment is strict,and the threshold is high,making the majority of mergers and acquisitions difficult to reach this requirement,and affecting the decision of investors.Second,it does not distinguish between the target enterprise shareholders and the acquisition enterprise.Their interests do not affect each other and should not be chaotic.Third,the interpretation of “its holding company”was misused,making China lack of triangular mergers and acquisitions.This paper chooses the continuity of interest doctrine to analyze the special tax treatment clauses,because the essential of it is the continuity of risk.China's mergers and acquisitions practice starts late,and it draws lessons from foreign system in the process of legislation.In this course,although China's special tax treatment provisions also embodies the continuity of interest doctrine,its connotation has not been explained.When implemented into aspecific specification,it deviated.As the continuity of interest doctrine was first proposed by the United States case law,in order to better understand it,it is necessary to review development of it in the United States.Studying the reason and aim of the connotative changes of the continuity of interest doctrine and improving China's Special tax treatment terms of China with the actual situation.The first chapter main deals with the meaning of mergers and acquisitions,the division of the principles of tax treatment in China,analyzing of the continuity of interest doctrine in tax and he reason why the principle is the entry point for research and analysis.The second chapter introduces the continuity of interest doctrine in the United States,analyzes its origin,evolution and purpose,and also interprets the current tax law.It is found that the current tax law of the United States is also in line with the risk rule.The third chapter main deals with the simple research on the development and evolution of China's mergers and acquisitions income tax system.It compares the differences between China and the United States,and puts forward the problems in the application of China.The fourth chapter is mainly based on the continuity of interest doctrine,specifically improving China's special tax treatment provisions.First,the proportion of equity or assets acquisition and the proportion of equity payment is appropriately reduced.It shows that the actual control power of the target company is obtained and the proportion of equity payment is gradually transferred to the market.Second,it needs to distinguish the target company's shareholders and the acquisition company's,after the merger and acquisition,the two sides will not affect the tax treatment each other,and further to distinguish whether the target company's shareholders obtain control power.Third,it needs to amend the "its holding company" explanation,increase the provisions of the triangle mergers and acquisitions,and provide that the form of equity payment may be the purchase of the company's own equity or its parent company's equity,but can not be mixed payment.