Tax Sparing Clauses In International Tax Treaties

Tax Sparing Credit refers to the premise that the resident country implements the tax credit system,and the investment income and interest of the multinational investor from the source country are exempted from taxation due to the preferential tax policy of the source country,a special tax incentive that is also exempted from taxation in the country of origin.It rose in the 1950 s and was generally adopted by all countries in the world.Countries have added tax sparing credits to bilateral tax treaties.Usually,developed countries give tax sparing to developing countries.However,with the changes in the world economic structure,the attitude of the developed countries to the tax sparing has been generally supported to concerns.In particular,after the OECD released an assessment report on the re-recognition of taxation in 1998,bilateral tax treaties signed or re-signed by major developed countries have few tax sparing clauses,or more restrictions on this clause.China is one of the main beneficiaries of the tax sparing credit.Since the signing of the first tax treaty with Japan in 1983,China has widely adopted the tax sparing system in tax treaties.After the reform and opening up,in order to attract foreign investment,a large number of tax incentives were implemented for foreign investors.In order to ensure that China’s tax incentive system can act on transnational investors and avoid the formation of tax revenue transfer,when it comes to foreign exchange tax treaties,it’s generally requires taxation to be included in the agreement.In addition to a few countries such as theUnited States,the foreign tax treaties contain different levels of tax aggression.Some agreements even stipulate tax excuse as a unilateral obligation of developed countries.Countries with similar economic conditions in China often sign bilateral reciprocal tax arrears or do not sign the terms of the excuse.However,in the implementation of the new corporate income tax law in 2008,China has eliminated the tax incentives for foreign investment.Since then,the taxation agreements signed by China have rarely included taxation provisions,and only taxation agreements have been included in the tax treaty signed by Ethiopia in 2009.After 2009,when China re-signed tax treaties with some developed countries,although the old agreements with these countries contained tax sparing clauses,There is no further tax sparing in the new agreement.Until 2016,the bilateral tax treaty signed between China and Cambodia stipulated the tax relief clause.The practice of various countries proves that the tax sparing clause provides an effective solution to the double taxation problem that is not solved by the credit method.At the same time,it also makes the tax incentives provided by the source countries truly implemented,and plays a role in encouraging foreign investment.In addition,some scholars have found that the use of this system as a capital exporting country has the effect of enhancing the overseas competitiveness of domestic enterprises.By the end of 2016,there were 24,400 domestic investors in China who set up a total of 37,200 foreign direct investment enterprises abroad.The foreign investment has spread to 190 countries or regions around the world,and the total foreign direct investment reached 135.39 billion US dollars.It can be seen that in recent years,The foreign investment has shown a trend of growth,ranking among the best in developing countries.The total amount of foreign investment has exceeded that of many countries,and the scale of foreign investment has reached a high level.In 2017,China’s foreign investment is second only to the United States,ranking second in the world.China has further accelerated the implementation of the “Belt and Road Initiative” to promote Chinese enterprises to go global.This paper focuses on the current transition from capital importing countries to capital exporting countries.Inthe background,by analyzing the use and role of China’s existing tax aggression policy,and drawing on international experience,it proposes suggestions for improvement of taxation provisions.On the basis of a large number of scholars’ research,this paper comprehensively uses the knowledge of law,law and economics,economics and other disciplines,and uses qualitative and quantitative analysis and other research methods to divide the paper into the following five parts:The first part is the introduction of this paper.Partly,it mainly includes the background,significance,and domestic and international literature review and theoretical innovation points and shortcomings;The second part is about the theoretical analysis of tax sparing,introducing the emergence,development,essence,scope of application of taxation,and several kinds of tax reliefs that are common in the world.A solid foundation;The third part is an overview of the tax sparing clauses signed by China and various countries.The author analyzes the relevant provisions and application of the tax excuse clause in the domestic law and sorts out the tax sparing signed between China and various countries.analyze the problems encountered in the implementation of the tax sparing clause;The fourth part is the international practice of the tax relief credit clause,in response to the changes in the attitude of countries to tax aggression,the author from developed countries and development The two countries analyze their attitudes,practices and reasons behind tax aggression;The fifth part is the main part of this article.Who attempts to analyze foreign tax treaties tax sparing provisions inherent flaws and problems encountered in the implementation process,drawing on experience of other countries in the world,put forward some suggestions.I hope that I can provide a little glimpse of China’s future negotiations with the “Belt and Road” countries on the tax relief credit clause.