A Study On The Rule Construction Of Value Creation Principle In The Allocation Of New Taxing Rights

The old order of international tax allocation was originated in the 1920 s and 1930 s,and under the guidance of the principle of economic loyalty,a taxation system of business profits was gradually built up with the principle of permanent establishment and independent transaction as the core.However,in today’s digital economy,there are three features: "cross-border operations without entities","reliance on intangible assets","data,user participation and its synergy with intellectual property".They have fundamentally changed the way companies create value and have significantly challenged the current international tax distribution order established for traditional economic forms.As a result,a wide range of market countries in the international community have started to explore the construction of new taxation rights.In this process,the principle of "value creation" advocated in the BEPS 1.0 era has been invoked by the international community and regarded as the theoretical cornerstone for the construction of new taxation rights in market countries.However,along with the difficulties in the design of the new taxation system,criticisms on the guiding position of the value creation principle have also emerged in the international community.On the one hand,the legitimacy of applying the value creation principle to the allocation of new taxation rights has been widely questioned,and scholars have criticized it with arguments such as "the concept of value creation is unclear","it is difficult to measure in practice","it is only applicable to supply-side value creation",etc."On the other hand,the application of the value creation principle in the allocation of new taxation rights has two major problems: confusion in the construction mode of rules and difficulty in reaching consensus on specific rules.On the other hand,the application of the value creation principle in the new taxation rights is characterized by two problems: the confusion of the rule construction model and the difficulty in reaching a consensus on specific rules.The international community has been unable to reach a consensus for a long time.In this paper,we will discuss the theoretical proof and the construction of rules on the application of the value creation principle to the allocation of new taxation rights.In terms of theoretical proof,firstly,this paper argues the appropriateness of the term value creation from the disciplinary meaning of the term;secondly,this paper will argue the necessity of it from the spiral development law of international tax allocation.In terms of rule construction: Firstly,this paper will analyze the unilateral,bilateral and multilateral models of the value creation principle in the allocation of new taxation rights,and then analyze and argue that the multilateral model is a reasonable model that can accurately implement the value creation principle on the basis of a broad consensus,so as to obtain more taxation rights for market countries.Secondly,this paper will discuss and analyze the rules on the scope of taxation,nexus and source of income,which are most relevant to value creation in the multilateral model,that is,the OECDled Pillar I reform,and reveal the inconsistencies between the current rule design and the value creation principle.Finally,this paper will make an outlook on the future trend of the value creation principle in the new taxation rights allocation and China’s response.Firstly,the rule construction model will move towards multilateralization and hard law;secondly,the accuracy of specific rules will be traded off with simplicity and tax certainty.As the world’s largest developing country,China should firmly grasp the multilateral international platform for new tax reform and,based on a careful study of the future trend of the application of the value creation principle to the distribution of new taxation rights,formulate a response that is in its own interest.At the international level,China should make proposals on the improvement of the rules on tax scope,the rules on the degree of connection and the rules on the source of income,taking into account its own national situation.At the domestic level,China should make preparations for the implementation of multilateral conventions in terms of tax legislation and collection and administration.