The Application Of Reasonable Commercial Purposes In Anti-tax Avoidance

In 2008,the Enterprise Income Tax Law was promulgated,and China has also summarized a set of anti-tax avoidance systems based on international experience and domestic practices.At the same time,the Corporate Income Tax Law has a chapter on“Special Tax Adjustments”.And introduced the "general anti-tax avoidance rules." The part of Article 47 on "unreasonable commercial purposes" can be said to be the programmatic clause of China's general anti-tax avoidance rules,and it is also a subordinate clause.The "Implementation Regulations" after this have further regulated the concept.The subsequent(Guo Shui Fa [2009] No.2)document is stipulated that enterprises that adopt several tax avoidance arrangements can conduct anti-tax avoidance investigations on these acts.After this,the "General Anti-tax Avoidance Management Measures(Trial)"(hereinafter referred to as the 32 Orders)mainly stipulates the procedures for implementing special tax adjustments for general anti-tax avoidance arrangements.China's tax law only provides for the meaning of "reasonable business purposes",the relevant content of corporate restructuring in terms of "reasonable commercial purposes" and the need for taxpayers to submit information to prove reasonableness,but there is no relevant case guidance or policy.Guidance,which makes the identification in practice extremely difficult due to lack of guidance.Moreover,in the process of mergers and acquisitions,if it is necessary to directly judge whether the "main purpose" of commercial arrangements is tax avoidance,it is difficult to judge because of the existence of many non-tax factors,when there are both commercial interests and tax benefits.How to distinguish the size of a certain interest is also a big problem.Since “reasonable business purposes” are distributed in different levels of different regulations,and there are fewer relevant jurisprudence,the recognition of the tax administration is largely dependent on the review results of the tax administration,which allows the taxpayer to assess the tax risk before the transaction.There are uncertain factors,and at the same time,because of its biased subjective aspect,there will be different judgments in the same case.The Supreme Court retrial child investment fund v.Hangzhou Xihu District State Taxation Bureau tax collection case as the first case of China's "reasonable commercial purposes",has a very high discussion value.This article uses this case as a guide to analyze the case and find out the problems in the trial process.For example,the definition of facts and the definition of burden of proof are unclear.The tax authorities lack the investigation of the transaction as a whole when determining tax avoidance.The case had a serious administrative tendency at the time of the judgment,but at the same time,the Supreme Court also identified several reference standards for“reasonable business purposes” in the case.Later,the case was used as an introduction to point out the problems existing in China's current identification of "reasonable business purposes." For example,the relevant regulations for "reasonable business purposes" lack a systematic legislative framework.The criteria for identification in practice are not complete enough,and the judicial Tax avoidance ability is relatively lacking.Afterwards,the relevant theories of "reasonable business purposes" are discussed in order to standardize their concepts.The purpose of tax benefits should be defined as "main purpose",and the scope of definition of tax benefits should be increased.Another example is the discussion of the relationship between "reasonable business purposes" and the substantive taxation principle,andthe criteria for tax avoidance determination are determined.Finally,the corresponding solutions to the existing problems in legislation and practice are proposed,such as establishing a comprehensive legislative framework for anti-tax avoidance,standardizing the criteria for “reasonable commercial purposes”,and strengthening the anti-tax avoidance capacity of the judiciary.