An Analysis On Legal Issues Of The Round-tripping Capital By Offshore Company

In recent years, the amount of FDI from offshore financial centre such as the British Virgin Islands (BVI), Cayman Islands and Samoa has increasingly gone up, especially the BVI, which has been the second largest source of FDI into China for many years. A significant portion of the FDI, according to some analysis, is actually round-tripping capital by some offshore companies rather than foreign capital. The round-tripping capital, a special phenomena arising form China's utilization of FDI, has not only brought about on our economy a large amount of capital, advanced technology and managerial experiences, but also caused some serious problems, such as tax avoidance, capital flight and money laundering, thus it aroused widespread concerns in China. Our government has got a deep understanding of this situation, and has also taken some effective measures to regulate round-tripping capital and has got some achievement, for example, the new"Enterprise Income Tax Law"is a good attempt. Through relevant analysis, however, I found that China's regulation on round-tripping capital mainly concentrated in round-tripping capital through special purpose company, rarely on round-tripping capital through offshore company, which is not consistent with China's current situation that a large scale of round-tripping capital is operated by offshore companies. In this paper, therefore, I introduced the reasons and the impacts of round-tripping capital by offshore company, and analyzed some relevant issues; meanwhile I presented China's current specifications on round-tripping capital and found some insufficiencies of the specifications, also borrowed some useful ideas from foreign country's regulations, in the end, I put forward some proposals on regulating round-tripping capital through offshore company.This paper is composed of the following chapters:Chapter I introduces of definition, characteristic of round-tripping capital and offshore company;Chapter II analyzes the approach, reasons and effects of round-tripping capital through offshore companies;Chapter III analyzes some relevant issues of round-tripping capital through offshore companies, such as market access of foreign investment, tax avoidance, capital flight, money laundering;Chapter IV introduces the relevant laws and regulations in China; analyzes the insufficiencies of the current regulations, and also borrowed some useful ideas from foreign country's regulation;Chapter V puts forward some proposals on regulating round-tripping capital through offshore company.