Research On The "Beneficial Owner" Based On The Substantive Business Activity

Nowadays,in order to promote the development of economy and protect the tax benefits of all countries,more and more countries prefer to signing tax treaties to achieve this goal between them.Besides,the tax treaties also give certain tax benefits to both parties.Therefore,many multinational corporations take the opportunity to use the preferential treatment given by tax treaties to evade tax.The “beneficial owner”system is one of their approaches.The international community has formulated many rules to prevent such acts.But most of them are abstracted and there is no clear standard to definite it,Similar to China.Although there are many cases in practice which recognize the beneficial owner through the criterion of substantive business activity,the defects in the design of the system(mainly to the problems of unclear standards and disconnection from the international community)led to the tax authorities have encountered a lot of difficulties in carrying out practices.In addition,China has put forward substantive business activity as one of the standard,but did not give a clear answer.Therefore,on the basis of the legislative background and contents of the “beneficial owner” system,this article tries to analyze standards of the“beneficial owner”,especially for “substantive business activity” and put forward some suggestions to improve them.The article is divided into four parts,the main contents are as follows:The first chapter introduces the origin and development of the beneficial owner and substantive business activity,also discuss the significance of the establishment of the beneficial owner system in tax treaties.In addition,deeply explained the substantive business activity to lay a foundation for further analysis of this concept.The second chapter studies on the application of substantive business activity in the international community.It mainly analyzes the substantive business activity of the BEPS Action Plan 5 and 6 by means of text and case analysis to refine what is“substantive” and what is “business activity”.The third chapter analyzes the application of the substantive business activity in China.At present,although the substantive business activity has been used in determining the beneficial owner,many problems also existing in our country.So this chapter mainly analyzes what problems still exist in both legislation and practice and studies the reason on them.The forth chapter put forward the way to improve the standard of “substantive business activity” in our country from many aspects,such as legislation and practice.