Anti-tax Avoidance Legal Research On Indirect Equity Transfer Of Non-resident Enterprises

In recent years,a controversial issue has pervaded the taxation field,namely,the issue of indirect equity transfer of non-resident enterprises.As international investment becomes more and more prevalent,enterprises are increasingly looking for legal edges.The place of source of income from equity investments shall be determined based on the location of the investee enterprise pursuant to the provisions of the relevant laws of our country.It can be seen that a non-resident enterprise must pay enterprise income tax in accordance with this provision for direct equity transfer,while indirect equity transfer is not subject to any tax as it is regulated by relevant laws.Therefore,indirect equity transfer has been adopted by a large number of nonresident enterprises and has become an important way of return on investment.For the purposes of safeguarding tax sovereignty of our country and ensuring smooth turning over of the relevant taxes to the Treasury,the tax authorities are also making continuous exploration,and the State has launched a series of normative documents to standardise levying of tax on indirect equity transfer by non-resident enterprises.In 2009,the SAT’s Document No.698 regulated for the first time the act of indirect equity transfer of non-residents.However,with the development of taxation practice,drawbacks in relevant provisions have gradually emerged.The promulgation of Document No.7 in 2015 has strengthened the supervision of non-resident cross-border tax sources,enhanced the certainty and maneuverability of indirect equity transfer of non-resident enterprises while cracking down on cross-border tax evasion.But there are still problems such as weak legal basis and vague criteria for determining reasonable business purposes.As a normative document with short application time,the relevant theoretical research is still not abundant.Therefore,this paper will focus on the analysis and understanding of No.7 on the basis of practical cases,and analyze the taxability of the indirect equity transfer of non-residents from the perspective of legal theory.Chapter One of this paper includes the status quo of the anti-tax avoidance in the indirect transfer of equity of non-resident enterprises is introduced,the general and special anti-tax avoidance provisions of our country on the indirect transfer of equity of non-resident enterprises are summarized,and a typical case of indirect transfer of equity of non-resident enterprises is analyzed,in order to raise issues and thinking through the case,and then issues are summed up as disputes over the legal basis of tax and standards for determination of reasonable business purposes.Chapter Twoof this paper includes the legal analysis of the anti-tax avoidance in the indirect transfer of the equity of non-resident enterprises mainly includes the definition of the indirect transfer of the equity of non-resident enterprises,as well as the analysis of the theoretical basis of the anti-tax avoidance in the indirect transfer of the equity of non-resident enterprises,but also raises the dispute on the theory of this behavior.Chapter Three analyzes the judgment standard of “reasonable business purpose” and the Ramsay Principle in Britain,including the historical evolution of the judgment standard of “reasonable business purpose” in our country,and the case practice of the judgment standard of “reasonable business purpose” in the period of No.7.Chapter Four puts forward some suggestions on the legal system of anti-tax avoidance for the indirect transfer of non-resident enterprise.Firstly,further improve the relevant legal system by raising the legislative hierarchy and improving the system of advance rulings.Secondly,further clarify the criteria for determining “reasonable business purpose” by establishing specific subjective and objective testing procedures and improving the allocation of burden of proof.