The Control Standards Of Reasonable Operation Needs In Controlled Foreign Company Rules

Under the background of "going out" strategy and "One Belt and One Road",more and more enterprises expand overseas investment business,and tax payment of enterprises going out has become a hot topic in the field of tax law.In China,the CFC rules are applicable to the tax payment management of overseas enterprises,but the CFC rules came into being for a short time,relative legislation is simple and not systematic,so many problems exist in its application."Reasonable operation needs" is an important standard for determining whether retained profits are justified in CFC rules.If the definition of reasonable operation needs is clear,many contradictions in CFC cases will be resolved.From this point,this dissertation attempts to discuss the definition of reasonable operation needs in China's CFC rules.By introducing the background and related concepts of controlled foreign company rules,this dissertation presents the control standards of reasonable business needs in controlled foreign company rules.Reasonable operation needs to be regarded as the exemption clause of the controlled foreign rules at the level of enterprise income tax law,whose control standards haven't been clearly defined.In view of the problems existing in the definition of reasonable business needs,this dissertation suggests that China learn from the provisions of other countries on the exemption provisions to improve the identification of reasonable operation needs through analysis of rules of some typical countries on the exemption provisions of controlledforeign company rules.The first chapter mainly introduces the background and related concepts of controlled foreign company rules.The controlled foreign company rules first came into being in the United States to regulate the behavior of deferred tax.In view of the increased scale of overseas investment,the phenomenon of enterprises using overseas subsidiaries to avoid tax payment has been prohibited for many times.China has introduced the rules of controlled foreign enterprises.Then related concepts of controlled foreign company rules are introduced into China,and this dissertation points out that reasonable operation needs shall be refined because judgment standard is not clear.The second chapter mainly introduces the problems existing in the determination of reasonable operation needs of controlled foreign company rules in China.There is mainly a lack of systematic legislative framework and no agreement reaches on the determination of reasonable operation needs in theory.At the same time,it is also a problem in application to equate reasonable operation needs with reasonable business purposes.Through the comparative analysis of reasonable operation needs and reasonable business purposes,the conclusion is that although the definition of reasonable operation needs and reasonable business purposes are similar and have the same function,all aimed at tax avoidance,and judgment standard of reasonable operation needs can partly learn from reasonable business purposes,but different application objects means that there are differences between them and reasonable operation needs has its own characteristics.As reasonable business purpose regulates general anti-avoidance while reasonable operation needs are applicable to special tax adjustment,they can be regarded as general and special relationship.The third chapter introduces the regulations and legislative evolution of other typical countries(the United States,Germany,South Korea,etc.)on the exemption clauses of CFC rules,which is convenient for our country to use for reference when defining reasonable operation needs.The fourth chapter puts forward some suggestions for the improvement of reasonable operation needs in our country and clarifies proof burden and proofstandards of reasonable operation needs in tax dispute litigation.It is suggested that China should define judgment standards of reasonable operation needs from the survival period of overseas companies,whether to actually carry out business activities,the time limit of undistributed profits,whether to implement related party transactions,simultaneously apply proportion exemption and amount exemption to undistributed profits,and the exemption of high tax rate regions.It is proposed that tax authorities should bear proof burden and enterprises should bear cooperation obligation.The standard of proof for anti-tax avoidance investigation cases carried out according to CFC rules should be higher than that of general tax dispute cases.