Research On Distribution Rules Of Cross-border Operating Profit Tax Right Under Digital Economy

The fundamental changes in the cross-border trading activities of enterprises under the business model of digital economy pose a severe challenge to the application of the existing rules of distribution of cross-border operating profit tax right based on the traditional theory.Based on the "supply theory",the current rules of distribution of tax rights of cross-border business profits recognize the principle of permanent establishment as the basic criterion of international tax rights distribution.The international tax agreement under the guidance of "supply theory" holds that "positive income is collected in the market country and negative income is collected in the resident country".Under the traditional economic business model,enterprises need to establish physical presence in the market country for production and operation activities,so as to form economic connection.Therefore,the principle of permanent establishment can reasonably distribute the tax rights and interests between the market country and the source country and alleviate the problem of double taxation.The mobility of digital economy business model,dependence on data and users and network effect make enterprise production and operation activities out of the range of connection degree of traditional permanent institutions.Moreover,under the new business model,demand factors such as users and market have become important contribution factors for enterprises to realize value creation.Under the digital economy,the fair and reasonable division of cross-border operating profit tax rights is still the core issue in the international tax field.International parties have studied and formulated relevant rules and countermeasures for the purpose of protecting their own tax interests,or reducing the tax base erosion and profit shifting caused by the digital economy and the problems caused by double taxation.From the OECD "Three Proposals" and Pillar One proposal to unilateral digital services taxes in France and the UK,various rules and plans have emerged.However,each scheme has different selection of distribution elements of tax right of cross-border operating profit.Therefore,in order to solve the "mismatch of profit income and value creation" and tax contradiction caused by unilateral measures,it is necessary to reconstruct cross-border operating profit distribution rules on the basis of the "supply and demand theory".Based on the theories related to the business model of digital economy and the distribution rules of tax rights of operating profits,this paper analyzes the value creation process of four digital enterprises represented by new business models,namely Facebook,Alibaba,Microsoft and Google,through the method of typical cases.Based on the theoretical analysis,this paper concludes that the current distribution rules of taxation right cause the mismatch between the place of profit income and the place of value creation and the imbalance of supply and demand factors,and carries on the first-stage reflection on the current distribution rules of taxation right of cross-border operating profits.Then,it sorts out the "three proposals",the multilateral measures of pillar one scheme and the unilateral measures implemented by the representative UK and France.On this basis,it analyzes the tax base that the market countries can distribute from Facebook etc.under the three tax rights division schemes of the above four typical digital enterprises.On this basis,this paper puts forward some suggestions on how to deal with the direct impact of digital economy on the distribution rule of tax power of transnational business profits and subsequent issues.At home,it takes value creation as the guidance,revises the profit distribution rule and replaces the concept of "permanent establishment" with "significant economic existence".International establishment or modification of bilateral tax resolution,active participation in the formulation of international tax allocation rules.