Study On The Attribution Of Corporate Income Tax Right In Cross-border Transactions Of Digital Economy In China

The rise of the digital economy has promoted cross-border transactions in various countries,and at the same time has brought challenges to the attribution of international corporate income tax rights.This thesis researches the attribution corporate income tax right in cross-border transactions of digital economy in our country and puts forward some suggestions for dealing with them.The disputes over the attribution of corporate income tax rights arising from cross-border transactions in the digital economy are as follows: Resident tax jurisdiction is challenged;The criteria of the permanent establishment is difficult to apply;The rationality of intangible asset transfer pricing is difficult to confirm;The determination of the nature of income causes disputes over the ownership of tax rights;Base erosion and profit shifting of multinational corporations.The international community continues to improve the international tax system on the basis of the principle of matching the results of tax on profits with actual economic activities and real value creation.First,improve the resident tax jurisdiction system,On the one hand,improve standards for determining resident enterprises;On the other hand,introduce new taxation rights,response to challenges to the basis of resident tax jurisdiction.Second,propose permanent establishment improvement and alternative plan,the "significant economic presence" proposed by India,the "significant digital presence" proposed by the EU,two-pillar program proposes released by OECD and the “marketing intangibles” proposal proposed by the United States also proposes new nexus rules.Third,propose the improvement plan of intangible assets transfer pricing.OECD proposes to focus on analysis of functions,risks and assets owned by parties to transfer pricing in the course of transactions.Fourth,propose the solution of the nature of income,Adhere to the principle of substance over form and determine the nature of income,or uniform collection of withholding tax.Fifth,propose the solution of tax evasion of multinational enterprises.Countries curb the erosion of the tax base and the transfer of profits of multinational enterprises by improving their domestic laws,adjudicating the recovery of losses and introducing new taxes.The problem of the attribution of corporate income tax on cross-border transactions of digital economy in our country includes the following aspects: First,the permanent establishment rules are incomplete,physical existence is regarded as the standard of permanent establishment in both domestic law and bilateral tax treaty,which is not applicable in cross-border transactions of digital economy;besides,there are some shortcomings in the exemption rules of permanent establishment in bilateral tax treaty,which need to be perfected.Next,the transfer pricing of intangible assets is insufficient,from the perspective of transfer pricing,the definition of intangible assets is not comprehensive and is prone to omission;due to the lack of quantitative methods,it is difficult to reflect the regional special advantages in transfer pricing;The profit split method is lack of clear profit division factor and is seldom used in practice.Last,the nature of income is unclear,lack of the relevant policy provisions for determining the nature of cross-border transaction income in digital economy.To deal with the above corporate income tax right attribution,our country should base on the principle of tax fairness,the principle of tax efficiency,the principle of international consultation and the principle of substance over form and take the following measures in time: first,improving the permanent establishment rules,supply the "permanent establishment for digitalization" rule,define its scope of application,identification criteria and orientation;improve the exemption clause of existing permanent establishment.Next,improve the transfer pricing of intangible assets,define the concept and scope of intangible assets from the perspective of transfer pricing;quantify regional special advantages;deeply study the profit split method,clear allocation keys.Last,identify the nature of income,define the concept and scope of income,determine the nature of income based on the nature of the transactions.