Research On Cross-border Income Tax Of Royalties Under The Digital Economy

The rapid development of digital economy has not only injected new momentum into global economic growth,but also posed new challenges to the application of tax rules currently in effect,among which the issue of taxation of cross-border royalty income closely related to intangible assets is attracting attention.In the digital economy,the emerging business models represented by application store and cloud computing,etc,make the qualitative analysis of the transaction income of intangible assets a major problem in international tax practice.The offline to online remote transaction model eliminates the dependence of digital enterprises on fixed business sites,making it difficult for the countries of source exercise tax jurisdiction over royalty income in accordance with traditional international tax rules.In addition,the secrecy of the digital economy has created opportunities for the transfer pricing of intangible assets,and has also caused the implementation dilemma of the arm's length principle,which is widely used in international tax practice.In this regard,the paper will focus on the current digital economy background,based on the previous useful theoretical research,combined with the new tax nexus rule and economic connection principle to analyze the nature and tax ownership of cross-border royalty income in the digital economy.On the qualitative issue of income,the paper mainly distinguishes the definition of two types of income from royalty income: one is the business income generated by digital product transactions represented by application stores,and the other is technical labor income represented by cloud computing.On the issue of attribution of income tax rights,it mainly focuses on the influence of permanent establishments and transfer pricing on the division of tax rights in the digital economy.On the basis of theoretical analysis,the paper also introduces Pan-American Satellite Tax Case to further illustrate the disputes arising from the taxation of cross-border royalty income in practice,thereby reflecting the deficiencies of China's current tax laws and putting forward ideas for further improving the relevant provisions of the tax law.The innovation of the paper is from an international perspective,to sort out the tax research results of international organizations represented by the Organization for Economic Co-operation and Development(OECD)in the digital economy and unilateral taxation schemes carried out by representative countries such as Israel and the United Kingdom,and to analyze their applicability to solve the problem ofcross-border income tax on royalties in the digital economy.At the same time,in view of existing insufficiencies of China's current laws and regulations,combined with the international advanced experience,the paper makes suggestions for the improvement of China's domestic tax law from the perspective of expanding the scope of royalties,reshaping the definition of permanent establishments,and adding supplementary measures for the arm's length principle,in order to play a guiding role in the tax practice.