Research On Tax Avoidance And Anti-tax Avoidance

Tax avoidance refers to the activities that the taxpayers adopt legal or non-illegal measures to lighten or relieve possible tax burdens given the prerequisite of the existing tax diversity and loopholes in the tax law system. There have appeared varied new ways to avoid taxes resulting in some negative consequences on social and economic life such as the reduced national fiscal revenue, damaged equity principle of tax, unreasonable burdens on different taxpayers, etc. which obstruct the reform and opening-up course and the sound development of China's socialist economy. Meanwhile, Tax avoidance and anti-tax avoidance are the world's common problems. With the deepening of reform and opening up, especially after China's entry into WTO, international and internal tax avoidance start to influence and infiltrate each other and have the tendency to spread and develop. Chinese government has already had a full realization of the necessity and urgency to put a stop to tax avoidance. The State Administration of Taxation of the People's Republic of China issued a series of laws and regulations to counter the action of transferring price taken by multinational enterprises for tax avoidance. Successful to some extent, tax anti-avoidance, with many problems to be solved, is still a vulnerable segment in China. In March, 2007, national people's congress passed new"enterprise income tax law", in which has a special section about anti-avoidance tax. It is our first special law about anti-avoidance tax which fully reflects the realization degree on anti-avoidance tax. It also reveals that study on this issue will bring much more important practical and theoretical significance. This paper tried to make a probe into the relevant legal matters on the internal tax avoidance of the Chinese enterprises and the countering of tax avoidance and to put forward some considerations and proposals on China's anti-avoidance endeavor.This thesis divides into introduction, main text and conclusion. The main text divides into five parts.The first part of main text is about the theory of tax avoidance, in which discussed the concept of tax avoidance and basic features of tax avoidance. At present, there are many different viewpoints on this theory in academe. Firstly, the concept of tax avoidance is considered to be a generalized sense and a narrow sense, and tax avoidance in generalized sense is divided into legitimate tax avoidance and unjustified tax avoidance. After analyzing on definition about the concept of tax avoidance, we can conclude that tax avoidance in narrow sense has the same extension with unjustified tax avoidance. Tax avoidance in narrow sense is an essentially illegal act, which use loopholes in the tax law system to reach the same economic effect. After making clear of the concept, the thesis pointed that the nature of tax avoidance is publicity, the legitimacy in form and the substantive illegality. It has a conclusion that tax avoidance is neither a legal act nor an illegal act, because of its illegality in essence.The second part of main text is about the system of anti-tax avoidance in other country. It did a detailed study on the experiences and development of tax anti-avoidance in the developed countries worldwide. The thesis mainly introduced the system of anti-tax avoidance in the U.S, the Germany, the Japan, and the Britain. In which, the thin capitalization regime in U.S, the controlled foreign company regime (CFC) in Germany, the transfer pricing regime in Japan, and some rules in Britain are all have special features. In the end, the thesis pointed that we should establish an international standards anti-tax avoidance system and general anti-avoidance rules, meanwhile, we should enhance duties of taxpayers.The third part of main text is about the present situation of tax avoidance in our country. Domestic enterprises often use transfer pricing and asset reorganization to avoid tax. Using tax preferences policy to avoid is also a common practice. At the beginning of reform and opening, we promulgated lots of tax preferences policy to absorb foreign investment, but it also caused a lot of tax avoidance problems. In international law, thin capitalization, transfer pricing, controlled foreign company, abuse of tax treaties are all very common.The forth part of main text is about the content new"enterprise income tax law"and its gains and losses. It is also the main part of the thesis. First of all, the transfer pricing regime is the main part of anti-tax avoidance, it has a longer history in our country, and it is more mature in comparison. On the basis of original regulation, new"enterprise income tax law"introduced"arm's length principle", clarified the obligation of providing data of tax payers. It also defined adjustment method of transfer pricing, clarified cost sharing agreement. Secondly, the thin capitalization regime is our first legislation in china. Moreover, tax haven is the most common way in international law, and CFC emerged because of it. New"enterprise income tax law"supply legal basis to"controlled foreign company". Finally, the general anti-avoidance rules is also a new try, it will enhance deterrence of tax law. After that, the thesis analyzed the losses and gains of our anti-tax avoidance system. It has several positive significances, such as filling up legislation, turning back country's loss, and benefit to our international competition. But it also has some deficiencies. For example, it lacks some rules about burden of proof; it doesn't have a specific thin capitalization system; The CFC leaks escape clause; It doesn't have reverent limitation of general anti-avoidance rules, plus how to make choices of between international tax agreement and domestic tax law.The fifth part of main text is about how to reform our anti-tax avoidance system. It puts forward practical suggestions for anti-avoidance in terms of tax legislation, tax reform, the improvement of tax collecting methods, and specific measures. They are intended to offer guidance to the practice of tax anti-avoidance.