On Permanent Establishment Tax Risks Of Non-resident Enterprises In China

In recent years, non-resident enterprises in China developed rapidly. In2012, theamount of non-resident enterprises’ tax revenue reached107.36billion Yuan, and thecorporate income tax also amounted to91.38billion Yuan. Non-resident enterpriseshave played a very important role in China. To make the healthy development ofnon-resident enterprises in our country and reduce its tax risk, to develop compliancemanagement and form the good habits of tax law, the research of tax risk ofnon-resident enterprises is very urgent. It is widespread for the non-resident enterprisewhich has a permanent establishment in our country, while the research is weakness.This paper makes a major research on the tax risks about the permanent establishmentof non-resident enterprises.In accordance with the relevant policies, this article will comb the tax risks ofpermanent establishment of non-resident enterprises; comprehensively list the policyrisk of the permanent establishment, and put forward other risks which lead to policyrisk on this basis. Then this article will analyze and propose appropriate policy risksaccording to the different types of permanent establishment cases, and make somereference to the enterprises which have similar business activities. Finally, on this basis,put forward the corresponding methods and measures, and build a special enterprisetax risk management mechanism.The main innovation of this paper lies in the segments of policy tax risks. Itanalyzes the internal and external policy risk systematically, and analyzes the otherrisks which are the root causes of non-resident enterprises. This paper argues that in thetax risks of the permanent establishment, policy risk is the most important; therecognition of the permanent establishment is paramount in it. The external policy riskis not controllable, the internal risk is controllable, and the external policy risk willlead to internal policy risk. The other risk is the root of internal policy risk. There is aninherent link between the three. When the companies build the tax risk management,they should focus on policy risk, especially the risk of internal policy in the overallgrasp of other risks.