Research On The Application Of Tax Law Of Hybrid Investment

Hybrid investment is a general designation of all investments with equity characteristics and creditor’s rights characteristics.Compared with traditional creditor’s rights investment and equity investment,it is an innovative investment tool.In recent years,because of the need of financing,the integration of hybrid investment in China has gradually developed,especially the development of sustainable debt has produced gratifying results.However,due to the dual nature of hybrid investment,the application of tax law needs to be solved,which is related to the income tax treatment of equity and debt investment.This paper starts from The principle of regulating tax with substance and uses the multi factor judgment method of the United States for reference.Under the comprehensive analysis,it is proposed that the application of the tax law of the hybrid investment should pay attention to the elements of the right of return.The introduction part of the article introduces a real tax dispute case,and points out that the problem discussed in this paper is how to identify the hybrid investment in the process of tax collection and payment,so as to make it applicable to the appropriate tax rules.The first part of the article is an overview of the hybrid investment and its application of tax law.It mainly introduces the definition,main forms and business purposes of the hybrid investment.It also points out that the two main reasons for the predicament of the application of tax law of hybrid investment are: first,the characteristics of the hybrid investment,second,the differences betweenthe debt investment and the equity investment in the income tax treatment.The second part introduces the related practice of the tax law attribute judgment of the hybrid investment,one is the multi factor judgment method of the United States,the other is the two announcements issued by China,and points out the main problems in the tax law attribute judgment legislation of the hybrid investment in China.The third part puts forward two suggestions to improve the application of the tax law of hybrid investment.One is to apply the principle of substantial taxation,the other is to pay attention to the elements of the right of return.The principle of substantial taxation emphasizes that when the external form of a transaction is inconsistent with its economic essence,it should be taxed according to its economic essence.Its application provides a point to use "Economic substance" to help hybrid investment to finish the application of tax law,which is conducive to the pursuit of substantial fairness in tax revenue.The elements of the right of return reflect the economic substance of a transaction.After analyzing the eight elements that may be the basis of the identification of stock and debt in China at present,the author puts forward the five elements of the right of return as follows:(1)The certainty of interest / dividend(2)The investor’s right to recover the principal(3)The agreement on the order of repayment(4)The investor’s right to distribute the remaining property of the investee(5)the right of litigation.