Study On The Legal Aspects Of Taxation Of Data Assets

In the era of digital economy,the scale of China’s data elements market has expanded rapidly,reaching RMB 81.5 billion in 2021.China has made a series of strategic plans to promote the orderly development of the data elements market,and some market players have been able to reap huge economic benefits by innovating business models through data assets,and the value of data assets has become increasingly prominent.While data assets are driving the rapid development of the market economy,they have also brought about a series of taxation issues.In tax practice,most data assets are outside the scope of taxation,and the development of digital technology and the rise of cross-border trade have made it easy for some internet companies to transfer their profits,resulting in the erosion of market country profits.Nowadays,China is in the midst of the globalisation of the digital economy and the market for data elements is developing rapidly,which should be combined with market practices to provide perfect tax rules for data assets to avoid the loss of our tax sources.Therefore,in order to protect China’s tax interests and maintain tax fairness,this paper will study the taxation of data assets in China,taking into account international experience,and make some suggestions for China to deal with the taxation of data assets.Firstly,analyze the basic theories related to data asset taxation.Data assets are technically intangible,reproducible and subjective,and economically non-competitive,limited and exclusive,and of changing value.Data assets are classified into raw data,standardised data and data products,and the three types of data asset value creation forms are analysed.On the one hand,the taxability of data assets is analysed from the perspectives of maintaining tax fairness and responding to the needs of data market practices,while on the other hand,the taxability of data assets is analysed from both economic and legal perspectives.At the same time,the constitutional,economic and tax law bases for taxation of data assets are analysed to demonstrate that taxation of data assets is justified on jurisprudential grounds.Secondly,we will clarify the current situation and dilemma of taxation of data assets in China.We analyse the current situation of data asset-related industries and market transactions,the current legal situation of data asset taxation and the current situation of data asset taxation and administration,and summarise the dilemmas faced by data asset taxation in terms of the tax entity system and taxation and administration system.Firstly,it is difficult to identify the elements of the taxation system of data assets.Data assets have unclear legal attributes and unclear division of ownership,which makes it difficult to identify the subject of taxation on data assets;the business model based on data assets may involve a combination of economic models,which makes it difficult to identify the object of taxation;the lack of a clear basis for determining the tax base of data assets will lead to difficulties in determining the tax base.Secondly,due to the concealment of data asset transactions and the fact that the permanent establishment is still determined by the standard of "physical presence",loopholes in the tax jurisdiction of data assets arise.Finally,China’s traditional tax collection and administration methods are unable to meet the challenges posed by the taxation of data assets,and the deficiencies in the tax collection and administration system and the regulatory model have yet to be improved.Thirdly,it discusses the international experience of taxation of data assets.The OECD has responded to the challenge of taxing data assets by first establishing a new "significant economic presence" nexus regime and then issuing a "two-pillar" framework policy.The EU’s exploration of taxation of data assets has led to the implementation of a digital services tax.Other major countries in the world have adopted specific practices in taxing data assets in the areas of transfer taxation and income taxation,mainly in the areas of expanding the scope of transfer taxation and improving the VAT taxation system,and in the area of income taxation,mainly in improving the criteria for determining permanent establishment.This paper compares the different practices of data asset taxation in foreign countries and explores feasible ways to improve the taxation of data assets,so as to provide reference for China to deal with the taxation of data assets.Finally,we propose to improve the taxation of data assets.Firstly,the taxation elements of data assets should be improved.Data asset transactions and data products will be included in the scope of corporate income tax and VAT respectively;data assets can be divided into internal application and external transactions,and only data assets traded externally can become the subject of taxation;the subject of taxation will be determined through the transfer of actual control;and the income from data assets will be used as the basis for determining the tax base.Secondly,to improve the rules of tax jurisdiction of data assets from two aspects,namely resident tax jurisdiction and non-resident tax jurisdiction,the use of transfer of ownership presumes resident tax jurisdiction.In order to close the loopholes in the non-resident tax jurisdiction,the principle of "significant economic presence" and the principle of "data presence" can be introduced by drawing reference from foreign experience,and the criteria for determining permanent establishment can be improved.Finally,the tax collection and management system for data assets can be strengthened by refining the system of real-time VAT invoice declaration,giving third-party platforms the obligation to supervise and report,and changing the rules for determining the identity of data asset transaction subjects.At the same time,the taxation and supervision model for data assets will be enriched by the use of digital technology and the improvement of tax collaboration mechanisms.