Research On The Tax Of The Identification Of Controlled Foreign Company

With the promotion of one belt,one road initiative,the pace of "going out" has been increasing.Multinational corporations have become common and multinational corporations are also one of the important subjects in international trade.International economic exchanges and cooperation are becoming more and more frequent,which is the embodiment of the booming global economic development,and also helps the economic development of all countries.However,due to the differences in political economy among countries,their tax systems will also be different.Multinational companies also take advantage of the differences in tax systems between countries,seize the loopholes in the law,set up controlled foreign companies in countries(regions)with low or zero tax rates,and use the companies to transfer profits to avoid domestic tax obligations.In order to protect the domestic tax base from being eroded,many countries have legislated to set up a controlled foreign company tax system in order to ensure the fairness of the tax environment.The premise of establishing the tax system of the controlled foreign company is to make clear what is the "controlled foreign company",that is,to meet the recognition criteria of the controlled foreign company in the country where the resident investor is located.This paper studies the identification of controlled foreign companies.China introduced the recognition standard of controlled foreign companies in 2008.After years of development,it has been gradually improved,but there are still many deficiencies."There are loopholes in tax payers","unclear control standards","single recognition of tax havens","imperfect exemption terms","vague definition of reasonable operation needs" will become the reasons for successful tax avoidance of multinational companies.Therefore,it is urgent to fill the loopholes in the national law.Although it can not be fully improved,it should also be as complete as possible,so that legislation can meet the current economic environment and stabilize the national tax base.Starting from the above issues,this paper mainly discusses the relevant rules of the identification of controlled foreign companies in China from four aspects.The first part outlines the basic situation of the controlled foreign company,including the concept and characteristics of the controlled foreign company,as well as the reasons for its tax avoidance and the principles to be followed in formulating the recognition rules.The second part introduces the current situation of legislation on the identification of controlled foreign companies in China,which leads to the shortcomings of the current identification rules of controlled foreign companies,and analyzes the loopholes in each identification standard one by one.The third part introduces the main rules of the identification of controlled foreign companies in Britain and the United States,and analyzes the advantages and disadvantages of the case,so as to provide reference for the improvement of legislation in China.The fourth part is based on the shortcomings of the second part,combined with the basic national conditions of our country and the legislative experience of the United States and the United States,and gives suggestions to improve the loopholes in our recognition rules one by one.