Research On Preventing Thin Capitalization Tax Regulations Of China

Thin capitalization is a description of financing mode for enterprise,also called capital hiding,share hiding or income extraction.That means in order to avoid tax or for other purpose,investor reduce the proportion of equity,raise the proportion of loans,use loans replace share in the choice of corporate financing.From the perspective of economy,company adds deduction before corporation income tax to increase its benefit by the way of thin capitalization,however it damage national interests the tax is the main source of national finance,and fiscal revenue is the foundation of national political,economic and social functions,the reduction of fiscal revenue will directly affect the national function,so most of the countries in the world have established the system of preventing thin capitalization regulations.This paper is divided into five chapters.The first chapter is to introduce the context and importance of the paper,summarizes the study of domestic and foreign scholars on thin capitalization system.The second chapter is the research on the theory of preventing thin capitalization tax system,analysis on the mechanism of preventing thin capitalization system and explain the reason and necessity of its appearance.The third chapter is the present situation and existing problems of China's thin capitalization system,study the thin capitalization system through the "Enterprise Income Tax Law" and "Implementation Measures for Special Tax Adjustments” exposure draft,describe the current situation and deficiency of China's thin capitalization system with data.The fourth chapter is the international comparison of thin capitalization system,draw useful experience for reference through the research and comparison of other countries.The fifth chapter is the advice of thin capitalization for China,through the experience of the fourth chapter,put forward feasible suggestions to further improve thin capitalization system.