Study On Base Erosion And Governance Issues Of Hybrid Mismatch Arrangements

With the development of economic globalization and free trade,cross-border trade activities are occurring more and more frequently.In order to reduce the overall tax burden of the group,A taxpayer conducts planning arrangements for difference of tax treatment on the same entity or the instrument through the use of two or more different tax jurisdictions,to achieve the overall double non-taxation.Multinational companies take advantage of the loophole of different tax jurisdictions differences or tax treatments in avoidance is the product of "tax competition",from the good side it is very beneficial to the invested regions of economic development,but more important,it highlights the lagged development of the current tax system and imperfection.For this reason,in October 2015,OECD launched the second action plan of the BEPS project,called as"Neutralizingthe influence of hybrid mismatch arrangements",which puts forward suggestions to hybrid mismatch arrangements caused by the hybrid instruments and the hybrid entities payment and appeals for government to amend the national regulations and improve the tax agreement.China,as a developing country,there is a certain difference compared with developed countries,In terms of economic opening degree and the foreign exchange control,which may cause the result of the mismatch of cross-border transactions or arrange production and the promotion chance is limited in our country.However,with the gradually opening of China's financial market,cross-border investment and speed up the pace of yuan internationalization,especially since our country has not yet established anti tax a'voidance mechanism,the problems caused by hybrid mismatch arrangement on our country's tax collection and administration are becoming more and more serious.In order to improve our country's emphasis on mixed mismatch arrangement problem,this paper adopt the method of comparison and combination of qualitative analysis,and discuss the specific measures of our government can take.based on the actual situation of China and the problems existing in the process of governance and absorbing foreign practical experience reasonably,.First of all,this paper introduces the research background and significance of hybrid mismatch arrangement,and the relevant researches at home and abroad are briefly introduced in the literature review.Secondly,it explains how hybrid mismatch arrangements erode our country's tax' base erosion through company 'tax arrangements activities,and based on the harm of hybrid mismatch arrangements,this paper expounds the theoretical basis of its governance.Moreover,from the perspective of domestic tax policy,tax agreement contents,tax collection and administration as well as cross-border tax information exchange,it expounds the current situation and existing problems of the erosion tax base of hybrid mismatch arrangement in our country.In addition,this paper specifically analyzes the anti-tax avoidance cases of the state tax of Qingdao on the investment of "the real debt of the named share".Then It draws on the OECD's practice of domestic and tax agreements and the specific responses of other countries.Finally,it puts forward some suggestions on improving our domestic legal system,filling the loopholes of the international tax agreement,raising the level of tax collection,and improving the exchange of international tax information.