Research On Tax Rules Of Short Selling

On March 31,2010,short selling and short selling officially started operation in Shanghai stock exchange and shenzhen stock exchange.As of November 20,2019,the balance of short selling on the Shanghai stock exchange was 10.98 billion yuan.In the latest listed science and innovation board,all the science and innovation board stocks from the first day of the market can be used as short selling,which means that short selling of the underlying securities has been further expanded.In contrast to the growing trend towards short-selling,the tax rules are vague.Specifically,the tax document for short selling transactions is the notice on the business tax issue of short selling short selling issued by the state administration of taxation in 2016,which lost its effectiveness after the replacement of the business tax with a value-added tax.Whether short selling can be effectively applied to the current provisions on value-added tax and other taxes,whether in theory or in practice,is an ambiguous state.Based on the basic tax theory of short selling transaction,this paper studies the tax problem of short selling transaction in China,and draws lessons from the tax rules of short selling transaction in developed securities market,so as to put forward corresponding countermeasures and Suggestions to solve the tax problem of short selling transaction in China.The first part is an overview of short selling.This paper briefly introduces the trading method,structure and mode of short selling and short selling.The second part is the basic theory of short selling transaction taxation.The essence of short selling is a kind of financial transaction.Therefore,it is very necessary to study the tax rules of short selling and short selling.The first is to discuss the theoretical basis of its taxation.In this paper,the theoretical basis of taxation includes the theory of quantitative taxation,the theory of tax equality,the theory of market regulation,and the theory of anti-tax avoidance.Secondly,it discusses the legal nature of short selling and short selling contracts and affirms that they have the same legal nature as consumer lending.Finally,the tax difference between short selling short selling and stock pledge repo transaction is discussed,which leads to the focus of this paper,that is,the dispute between economic substance and legal form.The third part is about the current tax rules of short selling and short selling.This section focuses on four issues.The first is the ambiguity of the tax law on the delivery of the underlying security,including whether to transfer ownership and whether to incur a tax liability.The second problem is the tax problem of short selling party to transfer the underlying securities,mainly is the confirmation of the purchase price and sales.The third problem is that the tax law attribute of short selling fee is not clear,the question is whether it can be regarded as interest to tax.The fourth problem is the lack of tax rules for reimbursable expenses,including the unclear meaning of tax law and the difficulties encountered in actual taxation.The fourth part is the extraterritorial experience of short selling.This part introduces the tax rules of short selling and short selling transactions in four representative countries,including the United States,the United Kingdom,Belgium and Spain,and provides some reference experience for China to improve the tax rules of short selling and short selling transactions.Different countries have some differences on different aspects and different issues in the transaction.An important reason for this difference is that different economic substance and legal form are selected,which leads to different tax concepts.The fifth part is the consummation of the effective taxation rules of short selling.This part USES the form of the total score,that is,first discusses the general rules of short selling and short selling transaction taxation,and then discusses the specific tax treatment.The general rule of this kind of transaction taxation is to regard the legal form as the principle basis of taxation,which is mainly discussed from the external environment and internal structure of the transaction.Specific tax treatment means includes 4 content.The first content is the tax treatment of short selling fees.The second content is the tax treatment of compensation expenses.The third is a discussion of situations where tax rules cannot be established in legal form,primarily the delivery and return process of the underlying securities.The fourth item is the special tax treatment of short sale proceeds,including the recognition of short sale proceeds and the time of tax liability.