Analysis On The Advantages And Disadvantages Of The Substance Tax Principal In Revenue Collecting And Management

Substance tax principal is a principal that has lots of disputes in taxation law,it emphasizes that when doing the tax law explanation and actually use it, when the legal form of actions is not the same as the economic essential, we should throw away the restriction of legal form, judge according to the substance of economy, take the actual situation as the base of taxation in order to levy according to the actual rate paying capacity of the tax payers. No matter how to orient the principal of substance tax,we cannot deny the substance legal concept of it in pursuing equity and fairness.At present, the understanding of the academy on substance tax principal has two different angles, one kind is the substance, that means when applying in tax law, the truth for taxation elements should be confirmed. When doing the confirmation,when finding that the appearance form and entity substance of fact relation and legal relation are not the same,we cannot only judge them according to the appearance form, but must like the other kind of laws to judge its entity substance according to the substance situation, unless the law regulates that it must levy according to the appearance form. When appearance fac(tform)and legal fact(ssubstance)are different, the latter should be adopted to explain the taxation law and its application. The other kind is the substance of economy, because of the tax burden, it is necessary to maintain the substance fairness,substance tax principal should be understood from its point bases angle"tax according to capability principal"and"tax burden fair principal". Because, the substance of law cannot reflect"tax according to capability principal", so we must understand it from"the substance of economy".All the countries have relevant regulations in their tax laws on substance tax principal."Japanese Company Income Law"clause 11, chapter 4"General Rules for the Relegation of Income", item 2, clause 41 in"The General Rules of Germany on Taxation"all clearly regulate the application of substance tax principal. In the revenue law and regulations of our country, where ever there are actions of tax evasion and tax avoidance,there are composing of rate paying elements but not distinctness but should ask for revenue, with the tax system reform and the strengthening of the construction of legal system,all have relevant regulations,that have made the application of substance tax principal gradually bring up to the schedule. From Dec. 1993 to present,"Interim Regulations on Value-added Tax","Interim Regulations on Consuming Tax"and the newly emendatory"Revenue Collecting and Management Law"our government published and put in force have all enlarged the strength of regulation on the application of substance tax principal. In the new"Enterprise Income Tax Law"came into effect on Jan. 1st, 2008,uses specially chapter 6 with the content of"Special Rate Paying Adjustment", regulated the special rate paying adjusting system on enterprise income tax, its content relates with the trade of the related parties, booking price fixing and tax avoidance etc. several aspects,in the related revenue laws and regulations of our country they care more and more on the substance tax principal,its application situations are more and more, the influenced scope is wider and wider, at the same time the restricted regulations for this principal is more and more obvious.The uses of substance tax principal in the work of revenue collecting and management are mainly shown in the 5 aspects: the first is that actualizing the substance tax principal is in favor of maintaining the equity and justice of tax law. Revenue equity principal requires that the revenue burden must be equally distributed between the main bodies of those having the rate paying liabilities according to the law,in order to realize equity levy, general levy and levy according to capability. But if minority tax payers evading rate-paying liabilities with all kinds of forms,it will cause the burden of revenue not even, that will make other honest tax payers stand in a disadvantage position in the market competition and aggravate their rate paying burden. At the same time, it will also cause the decrease of the national revenue income. Speaking from this sense, because the substance tax principal noticed the substance of economy under the cover of legal form and promote substance justice, more in line with the modern legal controlled country in pursing justice in the spirit of terms and the social characteristics of the tax law. The second is that actualizing substance tax principal maintains the effectiveness of the law execution of the tax authorities. On the layer of law, substance tax principal confirmed the effectiveness of the law executing of the tax authorities under specific situations,endow its special authority, raise the efficiency of law executing. The third is that the actualizing of substance tax principal is in favor of stopping the revenue evading action. No matter from the angle of economic capacity or rate paying capacity, or from tax according to capability and fair tax burden,as for the evading act of managing revenue, we should follow the fairness principal of revenue, deny the effect of tax avoidance according to the economy substance. That is to say, when the economic effect in the economic activities (substance of economy) is not the same with the legal facts of the legal documents in law(in law form),we should explain and apply the tax law according to the former. What tax law cares about is the happening of the levy fact,deny form and the substance of taking can only be economic facts, this is decided by the basic value target of taxation law. The fourth is the actualization of substance tax principal,it is made for legal operation and set up market economic order. Market economy is fair competing economy, credit economy and legal system economy. Substance tax principal will collect tax from those who have the important documents of rate paying and those with substance income, that is to say that all the people who have income should pay tax according to the law, this is good for accelerating the fairness of levy, expanding fair competition. The fifth is that actualizing substance tax principal is good for improving the increasing of the revenue income. If we can correctly master the substance tax principal during the practice of tax collecting and management, exert its active benefit, fairly solve the effectiveness problems of the justice and tax law execution, naturally it will improve the increasing of revenue income. Substance tax principal, not only reflects the fair value, but also the satisfaction for the deriving of the national finance and the behaving of state treasury superemacists.The existing problems of substance tax principal in the practice of tax collecting and management are mainly shown in the four aspects: the first is disobeying the principal of revenue legal creed. This is because the substance of revenue legal principal and substance tax principal are not the same; the emphasized points of the handling of revenue legal principal and substance tax principal are different;the advantage main body revenue legal principal and substance tax principal emphasized for protection is different. The second is to create contradictions between revenue cooperation and trust. When the taxpayers in violation of the obligation of trust to cooperate,not provide related levy fact evidence and tax authorities have no way of mastering the important documents of levy, for the sake of protecting the legal rights of the other honest tax payers not to be damaged, materialize the fairness of tax burden,we can make a decision that is not in favor of tax payers according to substance tax principal and tax laws, adopt check and ratify collecting method to collect tax. The third is that the correctness of the investigation and evidence of the tax authorities are not high. In the current professional practice still exists the none criterion on the formality and form of investigation and evidence;the consciousness of keeping the evidence is not strong;the content of investigation and evidence is incomplete; the pertinence of investigation and evidence is not strong etc. problems. The fourth is that substance tax principal has a great possibility of leading to the abuse of tax right. This is because the legislation of revenue is comparatively lagged behind, the legal discretion space too big and lack in the restriction of auxiliary systems; the professional qualifications of part of the revenue law executing staff is not high, having defects in the understanding on the purpose of discretion,lead to the deviation occurring in the reasonableness of use;because there is no ready made complete legal criterion and operation rules,during the process of eliminating the false and retaining the truth,the opinions of the insiders of the tax authorities are usually not the same, influence the normal development of the revenue work;the internal and external oversight on discretion is comparatively weak.For the sake of having the substance tax principal exert its benefit in the work of tax collecting and management,aiming at the existing actual problems, the author has brought up the suggestion from the aspect of perfecting related legislation and strengthen and improve the law executing work. The first is to perfect related legislation. First, it should be regulated by legal form, furthest minimize the current situation of using administration regulation especially internal regulatory documents form to publish the revenue policy. Next, since our country still haven't constituted the basic law of revenue, because of this, at the same time of emphasizing the revenue legal principal this basic principal, adding one clause similar to the general clause of General Law of Germany on Tax in the taxation law. At the same time, we should also not give up the enforcement on the original special criterion clause, because it was brought up aiming at the unconformity situation of form and substance on some specific type that can fill up the deficiency in tax law created by the revenue legal principal. The second is to strengthen and mend law execution work. Raise the working quality of investigation and evidence obtaining. Next, strengthen the law executing professional qualification education of taxation staff. Finally, strengthen and perfect monitoring system,prevent the right abuse of tax authorities.In the current economic transactions in the form of an increasingly diverse circumstances, the application of substance tax principal is not only for the sake of strengthening revenue collecting and management, preventing tax evasion and tax avoidance but also for the sake of protecting the legal rights of the taxpayers,making the tax match better the economic substance of the tax payers, making the fairness of the taxation law showing better, expediting the increasing of the national revenue income. We should do deeper research and discussion, in order to solve continuously the new problems coming out one after another in the actual economic life, this will play an active role in maintaining the equal rate paying right of the taxpayer, maintaining the equal rate paying right of the tax payers, maintaining the revenue efficiency, increasing finance income and improve the development of economy.