Research On The Standards Of "Beneficial Owner" In International Tax Treaty

Most countries tax income on the basis of both residence and source.As a result,cross-border transactions may be taxed twice,both in the source country and in the country of residence.This phenomenon is called double taxation.In order to avoid this,countries usually coordinate tax distribution between the two countries by signing bilateral tax treaties with countries that have trade or investment relationships with their countries.In the agreement to regulate tax distribution,almost all the preferential terms for obtaining dividends,interest and royalties are included,that is,the withholding tax on the above investment income can be partially or totally exempted.In order to protect the tax interests of both Contracting States,such withholding tax concessions are often only available to residents of both Contracting States,and applicants who enjoy preferential treatment cannot be merely an artificial entity inserted into the flow of assets.Therefore,in order to prevent non-Parties from obtaining tax incentives that are not subject to them by means of pipelines and other abuse of tax treaties,the key point is to accurately determine whether the applicant is eligible for withholding tax benefits on investment income.In 1977,for the first time,the Organization for Economic Co-operation and Development restricted applicants for tax benefits for dividends,interest and royalties as defined in Articles 10,11,and 12 of the Model,that is,the recipient must satisfy the resident of another Contracting State.And it is “beneficial owner”.Affected bythis,the model introduced by the United Nations also invoked the relevant system.Since the “beneficial owner” appeared in the model organization of the Organization for Economic Cooperation and Development and the United Nations model,many countries in the world have used this as a blueprint to incorporate the concept of“beneficial owner” into their bilateral tax treaties with other countries.However,official models and notes do not clearly define “beneficial owner”,and there are differences in the understanding of the term in the world.Therefore,the different differences in the “beneficial owner” identification standards continue to emerge in theory and practice.Along with Chinese reform and opening up process,more and more cross-border investment has emerged,and the number of cases related to the identification of“beneficial owner” has also increased.In order to better integrate with the international community,the State Administration of Taxation has promulgated normative documents such as Circular No.601,Announcement No.30 and Announcement No.9 since 2009,providing guidance for China to identify “beneficial owner” in practice.This paper mainly uses the comparative analysis method,case analysis method,inductive analysis method and other writing methods,analyzes the differences of the identification standards of the current “beneficial owner”,analyzes and draws on the advantages of other countries,and improves the "beneficial owner" system in China.Provide directions.The paper is divided into three parts: introduction,body and conclusion.The text has four chapters.The first chapter is an overview of the “beneficial owner” in international tax treaties.The chapter is mainly elaborated from two subsections.The first section introduces the concept of “beneficial owner” and the value of recognition.In the concept proposal,the term first appeared in the trust system of the Anglo-American legal system,and then gradually entered the field of international tax law.In the value of the “beneficial owner”,the conduit company or agent or nominee is the method of abuse of tax treaties and tax incentives commonly used by third-party residents.Accurately identifying “beneficial owner” can give investors tax incentives andpromote investment;accurately identifying “non-beneficial owner” can prevent the occurrence of international tax avoidance and realize the treaty purpose of effectively preventing double taxation.The second section describes the evolution of “beneficial owner” in international tax treaties.Mainly from the emergence and adoption of the field of international tax law,the initial introduction of the “OECD Model”,the conception and development of the concept of the catheter company,the positive definition of the concept of “beneficial owner”,the provisions and differences of the“UN model”,easy to explain We have a preliminary understanding and understanding of “beneficial owner” from the perspective of international sources.The second chapter is the divergence of the “beneficial owner” in the international tax treaty.This chapter analyzes the main differences between the current “beneficial owner” in determining the problem from three aspects.The first section sets out the differences between the meaning of domestic law or international law,namely the choice of the meaning of the domestic law of the State party or the meaning of an independent international law to understand the “beneficial owner”.Some scholars believe that it should be understood from the perspective of the domestic law of the State party.Some scholars believe that a unified meaning of international law should be applied to understand,and the tendency of the OECD Model Note is more appropriate to apply the meaning of international law.The second section explains the differences between the applicable legal nature standards and the economic substantive standards,and interprets them through specific practical cases.The Prevost case in Canada applies the legal nature standard,the Bank of Scotland case applies the economic substantive standard,and the OECD Model Note is based on the legal nature standard and attempts to reconcile these two criteria.The third section describes the relationship between the “beneficial owner” and a country’s anti-tax avoidance rules.The OECD Model Note does not recognize the “beneficial owner” as a general anti-tax avoidance rule in a country.The third chapter is about the legislation and practice of “beneficial owner” in various countries.Through comparative analysis,the legislation and case practice of“beneficial owner” in the United States,Canada and Denmark were selected toanalyze how the above countries chose the differences in the criteria,and draw on its merits.The first section is the US legislation and practice on the criteria for“beneficial owner”.The United States has continuously revised and improved its own LOB clauses,and has applied the PPT test and other methods that are currently the most important international anti-tax treaty abuse.More effective multi-angle,multiple test methods to identify “beneficial owner”.As the most detailed identification rule at present,the LOB clauses in the US tax treaty and domestic law have important reference value for the theoretical and practical development of China on the issue of “beneficial owner”.The second section is Canada’s legislation and practice on the identification of “beneficial owner”,which mainly adopts legal nature standards,combined with “beneficial ownership” testing,exclusion of agent testing,and no discretion test to certificate “beneficial owner”.The third section is the Danish legislation and practice on the “beneficial owner” certification standard,which is very concerned about the purpose of the transaction between the two parties.The fourth chapter is the legislative practice and improvement of the “beneficial owner” in China.It is mainly divided into three sections for elaboration.The first section introduces the legal provisions related to “beneficial owner” in China through the methods summarized and summarized,and analyzes the key announcements.At the same time,combined with the classic cases of “beneficial owner” in practice,the application of unfavorable factors in the identification of “beneficial owner” in China is discussed.The second section points out that Chinese “beneficial owner” system has inadequacies with the OECD recognition trend,the lower level of legislation,the more ambiguous identification criteria,and the difficulty in obtaining tax information.The third section is to improve the “beneficial owner” certification standards in China.For the issue of differences with the OECD identification trend,in terms of the application of the meaning of international law or domestic law,China should follow the OECD identification trend and seek mutual agreement on bilateral tax treaties.The “beneficial owner” has reached a consensus;in applying the legal nature standard or the economic substantive standard,China should conform to the OECD recognition trend,and the “benefit owner” can be identified based on the economic substantivecriteria,but it should also be recognized.Pay attention to the legal relationship between transactions;in the application of domestic anti-tax avoidance rules and tax treaties,China should comply with the OECD recognition trend.There is absolutely no need to strictly limit the scope of application of the “beneficial owner” system to deal with various abuse agreements.For the problem of lower legislative level,China can now use the administrative regulations of the State Administration of Taxation to issue relevant regulations on “beneficial owner”,thereby raising the relevant legislative hierarchy of “beneficial owner”.For the problem that the certification standard is more vague and single,China can refine the “beneficial owner”certification standard,refer to the US LOB clause,refine each unfavorable factor,and absorb the PPT test criteria,and enhance the purpose of the investigation transaction in the identification.Appropriate identification of applicants through subjective and objective multi-angle testing.Regarding the difficulty in obtaining tax information,Chinese tax authorities can strengthen international cooperation in tax information exchange in the global context of automatic exchange of current tax information,enhance communication between provinces on cross-border investor information,and gradually establish and improve domestic “benefits”.In summary,this paper analyzes the differences between the “beneficial owner”certification standards,and comparatively analyzes the differences between the“beneficial owner” recognition system in China and other countries and the differences with the OECD recognition trends.The defects and shortcomings in the system of benefiting the whole people were analyzed.At the same time,learning from essence of advanced national legislation and practice,and making recommendations on the improvement of relevant systems in China.