Research Of The Value-added Tax Jurisdiction On Crossborder Transaction Of Digital Products

Under the background of economic globalization and digitalization,cross-border service trade in the world has experienced explosive growth.As far as China is concerned,with the gradual improvement of China’s new open economy system,from 1982 to 2018,the total value of imports and exports of services has increased from 46.9 Billion US dollars to 791.9 billion U.S.dollars,with an average annual growth rate of 15.3%.In 2018,China’s service imports and exports accounted for 14.6% of the total value of imports and exports,an increase of 3.5 percentage points from 2012.Services trade has become an important engine of foreign trade development.[footnote Ref:1]At the same time,the increased interaction between VAT systems in various countries has led to severe challenges for traditional VAT systems that focus on a single tax jurisdiction.For a long time,the lack of international coordination of the VAT system has led to many differences in the rules of various countries.This has also caused risks of double taxation and unintentional double non-taxation in cross-border trade,especially crossborder service trade with intangible characteristics.In recent years,the rapid development of the digital economy has further expanded this risk.Against this background,OECD formulated the International VAT/GST Guidelines to provide guidance for countries to revise domestic VAT regulations.At present,China’s valueadded tax system is still quite different from the systems implemented by major countries in the world.On the basis of objective assessment of China’s national conditions,we should learn from internationally agreed rules and revise and improve China’s cross-border VAT collection rules.This mainly includes: establish a complete destination principle in cross-border service trade,clarifying the scope of taxable concepts and taxable items of digital products,improving the rules for determining the place of consumption.In order to fundamentally resolve the conflict of VAT tax jurisdiction,China should also actively participate in and utilize the international tax cooperation mechanism to give play to the role of a great power and promote the international coordination of the value-added tax system.This paper will study the VAT tax jurisdiction rules of cross-border digital product transactions from the following aspects:Firstly,the introduction of this article introduces the problems faced by the traditional VAT system in cross-border transactions of digital products and the necessity for the research.Secondly,in the first part of the text,analyzes the key principles and several key nodes involved in the VAT tax jurisdiction system for cross-border transactions of digital products.It follows the processing level of VAT at a logical level.Starting from the definition of the concept of digital products to the theoretical basis of the principle of destination,and its implementation in cross-border digital product transactions,which attempts to provide theoretical support for subsequent analysis of domestic and foreign systems and put forward suggestions for the improvement of China’s VAT tax jurisdiction rules.Thirdly,this article combines the Value Added Tax Law of the People`s Republic of China(Draft for Comments)promulgated by the Ministry of Finance and the State Administration of Taxation to analyze the tax jurisdiction rules in the current VAT system that involve cross-border transactions of digital products and try to find the deficiency based on theoretical analysis.Fourthly,by analyzing and comparing the legislation and judicial practice of the European Union,Japan and other countries,it is intended to provide a useful reference for the improvement of China’s VAT tax jurisdiction system.Finally,combining theory and practice,VAT tax on China’s cross-border digital product transactions Jurisdiction system makes recommendations.