An Application Research On "Beneficial Owner" Clause About Anti-treaty Shopping In China

With the rapid development of China's economy, the domestic market environment has been improved and international trade cooperation has been increased. In order to facilitating trade exchanges and cooperations between China and foreign countries, eliminating tax barriers, our country has already signed 101 avoidance of double taxation agreements till June 2016. To conclude international tax treaties, the contracting parties need to negotiate and make certain interest compromises. These tax treaties can prevent and mitigate double taxation, coordinate the international tax distribution relationships, promote international exchanges and cooperation of taxation and provide preferential tax policy for the economic transactions between the residents of parties.However, the favorable relativity is broken by behavior of tax treaty abuse, the tax treaty becomes a powerful tool to reduce the tax burden, the phenomenon of international tax avoidance with tax treaty abusing has become increasingly serious.Hence, both international and domestic academics actively committed to seeking solutions to this problem. Among them, the "beneficial owner" clause is undoubtedly a very important and effective method to regulate the abuse of tax treaties.This article uses comparative analysis, case studies and summarized way. First of all, it makes a concept definition of "beneficial owner" combined with the literature in domestic and foreign countries. Secondly, it starts with the harm of the State parties and the macroeconomic environment, traces the source,and ends up with the profound thinking of the cause of "beneficial owner" clause by detailed analyzing the characteristics and the variety forms of tax treaties abuse behavior.Besides,it compares the Look through Approach, the Channel Approach and the Bona Fide Approach,which have both connections and differences,to describe how the "beneficial owner" clause block tax loopholes.Thirdly, it reviews the development of six important normative documents enacted by the legislature of China during 2009 to 2016, selectes the universally representative equity transfer transactions of the real estate multinational enterprise as a case from the tax practice in China, combines applicable policy with concrete practice, shows the daily collection and management workflow of big business by the tax authorities clearly and completely, and provides operational guidelines for tax officials blocking tax loopholes with "beneficial owner" clause effectively. Then, under the terms of the "beneficial owner" clause application status in China, it identifies deficiency of the "beneficial owner" clause and analyzes its influencing factors. Finally, it draws lessons from advanced international experience and aims at specific problems in China, puts forward five improving suggestions.