Study On The Double Taxation Of Income Tax Of Infrastructure Public Real Estate Investment Trusts(REITs)

After more than two years of pilot programs,the development of public After more than two years of piloting,the development of China’s infrastructure public REITs has entered a new stage.The development of REITs in China aims to promote the healthy development of the real estate market by effectively revitalizing the stock assets and providing a stable supply mechanism of long-term funds for the real estate market through REITs,and also hopes to provide investors with investment products with low risks and stable returns,and reasonably guide social capital to support the development of the real economy.However,under the current tax system,China’s REITs have problems such as excessive tax burden,double taxation and lack of anti-avoidance system,which seriously compress the income space of REITs products,reduce the enthusiasm of investors to participate and affect the national tax revenue.Among them,the problems of double taxation of REITs income tax and the gap of anti-avoidance rules are particularly prominent,and the problem of double taxation in each stage of REITs has caused obstacles to the development and growth of REITs market,and it is urgent to find the crux and solve them.China’s exploration in the REITs market started early,from domestic enterprises to issue Chinese concept REITs in the overseas market to the practice of REITs in the domestic market,and finally selected the field of infrastructure as the pilot direction of China’s REITs.The current tax of public offering of infrastructure REITs involves three stages: establishment stage,operation stage and exit stage,with many tax subjects and complicated tax links.Although relevant departments have solved some problems to some extent through various documents,the problem of economic double taxation of public offering REITs income tax is very serious,especially in the operation stage.The income generated by REITs is taxed twice at the REITs level and at the investor level.In practice,the problem of double taxation of income tax of publicly raised REITs is manifested as follows: at the level of project companies,the project companies pay corporate income tax on the income from the operation of underlying assets,and investors pay income tax on the income from dividends in the way of withholding,resulting in the dilemma of double taxation of income tax of publicly raised REITs.There are three reasons for the double taxation of public REITs income tax.From the perspective of normative causes,there is no special law on trust income tax,the legal system of REITs related tax is not perfect,and the tax preference of income tax is also in a blank state.From the perspective of structural causes,the core architecture of "public offering fund + asset-backed securities" as two "special purpose vehicles" leads to the complex product structure of Chinese public offering REITs,and the multi-agent transaction mode leads to the complex tax burden structure of REITs,which is easy to lead to double taxation.From the perspective of theoretical causes,the "dual ownership" of trust and the traditional "one thing,one right theory" of the civil law system are still not suitable,and the application of the trust conduit theory and the trust entity theory remains to be clarified.So,how to crack the dilemma of double taxation of public REITs income tax and the basis of double taxation exemption have become the main issues discussed in this paper.With reference to the economical solution of double taxation of dividends,this paper tries to exempt double taxation from two aspects: REITs level and investor level.Whether the project company collects income tax or not is rooted in the dispute between the trust tax entity theory and the conduit theory.According to the conduit theory,the project company,as the channel for the revenue transfer of REITs products,should not bear the tax obligation.From the legislative purpose of corporate income tax,the project company has almost no retained earnings,so it is not necessary to levy corporate income tax on it.According to the principle of substantial taxation,investors,as the ultimate beneficiaries of trusts,should bear tax obligations.However,in order to encourage investors to participate in and hold REITs for a long time,corresponding preferential tax policies need to be introduced.In order to solve the dilemma of double taxation of public REITs income tax,the improvement path is put forward from four aspects: first,the concept of avoiding double taxation of public REITs income tax should be established at the ideological level,the principle of tax neutrality should be adhered to and the legal system of REITs tax should be improved;second,the principle of beneficiary taxation should be established to make it clear that investors are the tax subjects.At the same time,the organizational structure of publicly offered REITs should be improved and optimized,and the tax burden structure of REITs should be simplified.Third,reasonable and effective preferential tax policies should be formulated.In order to solve the problem of double taxation and reduce the tax burden of taxpayers,strict thresholds should be set for the application of preferential tax policies.Fourth,pay attention to the anti-tax avoidance thinking in the process of solving the problem of double taxation,and gradually improve the anti-tax avoidance rules of public REITs income tax,so as to nip in the nip.