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Study On The Legal Issues Relating To Chinese Individuals' Cross-border Tax Avoidance

Posted on:2020-06-13Degree:MasterType:Thesis
Country:ChinaCandidate:H ZhangFull Text:PDF
GTID:2506305897967109Subject:International Law
Abstract/Summary:PDF Full Text Request
Individual income tax is one of the important taxes in China.Combating individual cross-border tax avoidance is not only an inevitable move to protect China's tax base,but also a guarantee of tax equity.Through tax collection and management examples,we can find that the main ways of individual cross-border tax avoidance include transfer pricing,utilization of controlled foreign companies,transformation of tax residence and non-resident individuals' indirectly transferring domestic property.Combating individual cross-border tax avoidance needs to be supported by individual anti-tax avoidance legislation.However,before 2018,anti-tax avoidance rules were not introduced in China's Individual Income Tax Law.It was until 2018 that China introduced the Transfer Pricing Rules,Controlled Foreign Company Rules,General Anti-tax Avoidance Rule and Exit Tax Rules into the Individual Income Tax Law.Compared with the relatively sound anti-tax avoidance system in the enterprise income tax law,a standardized and specific legal system has not been established in the field of individual anti-tax avoidance.The anti-tax avoidance rules in the newlyamended Individual Income Tax Law are quite abstract,and many of the key concepts have not been clearly defined,such as “reasonable business need” in Controlled Foreign Company Rules,“justifiable reason” in Transfer Pricing Rules and “reasonable business purpose” in General Anti-tax Avoidance Rule.Therefore,this article is aimed at analyzing the defects and loopholes of China's current individual anti-tax avoidance system by studying the methods and cases of cross-border tax avoidance in China,and ultimately proposing specific countermeasures and suggestions from the perspectives of anti-tax avoidance rules design and tax collection.For instance,it is suggested to include individuals in the application scope of the “General Anti-tax Avoidance Management Measures(Trial)”;to clearly define the key concepts in individual transfer pricing rules,such as “just cause” and “reasonable method”;to expand the exception of controlled foreign company rules and to refine the calculation rules for the attributable income of controlled foreign companies;to establish the rules applicable to nonresident individuals' indirectly transferring property within China;to set anti-tax avoidance clauses in China's CRS,and implement key monitoring for high-income individuals.All in all,specific and operational rules can provide certainty and predictability to both tax authorities and individuals.Otherwise,the tax authorities will once again face an embarrassing situation where no law can be applied,which is not conducive to the statutory principle of taxation,nor to the principle of tax equality.It is suggested that the detailed and interpretative provisions of individual anti-tax avoidance rules should be introduced in a timely manner,which not only helps the tax authorities to apply antitax avoidance rules to protect China's tax base,but also limits the discretion and enforcement power of tax authorities to the framework of law with the aim of protecting the legitimate rights and interests of individual taxpayers.
Keywords/Search Tags:individual income tax, cross-border tax avoidance, general anti-tax avoidance, special anti-tax avoidance
PDF Full Text Request
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