Exploration Of Taxing On Global Indirect Investment Earnings

With the development of economic globalization, especially in finance area, the rule of capital always going after profits makes it even faster. As every coin has two sides. On the one hand, the flow of capital improves the efficiency and has a profoundly positive effect on macro-economic growth; one the other hand, if not dealt carefully, the flow of capital would also harm one country’s tax profit, causing international tax-avoidance. Under this circumstance, it is considered extremely essential to carefully look into tax on indirect investment earnings properly. This paper mainly discusses tax on indirect investment from two sides: one is international tax-cooperation; the other is tax-avoidance. Based on the summary of international anti-tax avoidance measures, most of which come from OECD, and then actual case study, hopefully, this paper would raise several advices useful for Chinese tax system.This paper concludes four parts.In the first part, it introduces the current situation of what this paper studies, the purpose of what this paper studies, and the review of literature.In the second part, from the angle of tax system, it explores two kinds of taxes involved when tax indirect investment earnings. One is withholding tax, the other is capital gain tax. We discuss the economic influence of taxing indirect investment earnings in both direct and indirect ways. Then, we introduces taxing principles and economic effects.In the third part, it states international tax-coordination on indirect investment earnings. There are three models discussed most. First is tax treaty model which highlights the importance of tax treaties in coordinating countries" tax profits; second is zone tax coordination model, which attaches importance to a group of countries united in a way and making tax policies coordinated base on this foundation; third is international organization model, which indicates to establish an organization dealing with international tax affairs including tax coordination. In the fourth part, it discusses tax management over taxing indirect investment earnings internationally and domestically. To begin with, we introduce three anti-tax avoidance measurements related. After that, we make domestic actual cases study applying what we introduced in the beginning of this part, to analyze the difficult spots of the cases. Last but not the least, based on the analysis of two cases, and together with summary of domestic regulations related, we give our advices. We suggest that it is essential to take advantage of international relating research results and OECD regulations to improve ours; as to the emerging tax issues, we should make specific regulations; then make sound communications.