A major concern on base erosion and profit shifting(BEPS)is transfer pricing,which is discussed in BEPS Action Items 8-10 and 13.Actions 8-10 contain revised guidance,which ensures that transfer pricing rules secure o...A major concern on base erosion and profit shifting(BEPS)is transfer pricing,which is discussed in BEPS Action Items 8-10 and 13.Actions 8-10 contain revised guidance,which ensures that transfer pricing rules secure outcomes that better align operational profits with the economic activities that generate them,as well as guidance on transactions involving cross-border commodity transactions and on low value-adding intra-group services.Action 13 contains a three-tiered standardized approach to transfer pricing documentation,including a minimum standard on country-by-country reports(CbCRs).However,the approach of Actions 8-10 still focuses on the restoration of the dysfunctional rules built on the arm's length principle,which is rooted in the principle of separate independent entity.The threshold of Action 13 excludes many large multinational enterprises(MNEs)from the CbCR requirement and deprives developing countries access to the information of MNEs below the threshold.Chapter 6 of the Chinese Corporate Income Tax Law,under the title"Special Tax Adjustments,"provided the legal foundations of transfer pricing and transfer pricing documentation in China.To effectively implement the BEPS package in China and to comprehensively update the existing Circular 2,the State Taxation Administration(STA)released a Discussion Draft of a Circular on Implementation Measures for Special Tax Adjustments in September 2015,ranging from Action 3(controlled foreign company rules),Action 8-10(aligning transfer pricing outcomes with value creation)to Action 13(transfer pricing documentation and country-by-country reporting)in details.Right now,a series of patches,such as the STA Bulletins 45,42,64,and 6,have been made to replace a substantial part of Circular 2.展开更多
Today,international taxation is at an inflection point.The implementation of action plan on base erosion and profit shifing(BEPS)and enforcement of the Belt and Road Initiative are reshaping taxation rules and princip...Today,international taxation is at an inflection point.The implementation of action plan on base erosion and profit shifing(BEPS)and enforcement of the Belt and Road Initiative are reshaping taxation rules and principles.As a crucial aspect of outbound taxation,foreign tax credit is expected to embrace the normative objectives of the new era,which emphasize the importance of subjecting all trans-border business activities to equitable,efficient,and coordinated taxation.Currently,China's foreign tax credit prescribes in an incompatible pattern;it lacks clear legislative intent,despite marking specific rules with archaic unilateral characters.To reform this regime,legislative principle should reflect the latest consensus on the economic activities'nexus and ensure that the income derived from trans-border transactions falls under a minimum tax.Regarding specific rules,it is strongly suggested that active and passive incomes be distinguished and the equity holding threshold of obtaining indirect credit be lowered.China's foreign tax credit reform should take an inclusive perspective,actively participating in the cooperation between countries.展开更多
文摘A major concern on base erosion and profit shifting(BEPS)is transfer pricing,which is discussed in BEPS Action Items 8-10 and 13.Actions 8-10 contain revised guidance,which ensures that transfer pricing rules secure outcomes that better align operational profits with the economic activities that generate them,as well as guidance on transactions involving cross-border commodity transactions and on low value-adding intra-group services.Action 13 contains a three-tiered standardized approach to transfer pricing documentation,including a minimum standard on country-by-country reports(CbCRs).However,the approach of Actions 8-10 still focuses on the restoration of the dysfunctional rules built on the arm's length principle,which is rooted in the principle of separate independent entity.The threshold of Action 13 excludes many large multinational enterprises(MNEs)from the CbCR requirement and deprives developing countries access to the information of MNEs below the threshold.Chapter 6 of the Chinese Corporate Income Tax Law,under the title"Special Tax Adjustments,"provided the legal foundations of transfer pricing and transfer pricing documentation in China.To effectively implement the BEPS package in China and to comprehensively update the existing Circular 2,the State Taxation Administration(STA)released a Discussion Draft of a Circular on Implementation Measures for Special Tax Adjustments in September 2015,ranging from Action 3(controlled foreign company rules),Action 8-10(aligning transfer pricing outcomes with value creation)to Action 13(transfer pricing documentation and country-by-country reporting)in details.Right now,a series of patches,such as the STA Bulletins 45,42,64,and 6,have been made to replace a substantial part of Circular 2.
文摘Today,international taxation is at an inflection point.The implementation of action plan on base erosion and profit shifing(BEPS)and enforcement of the Belt and Road Initiative are reshaping taxation rules and principles.As a crucial aspect of outbound taxation,foreign tax credit is expected to embrace the normative objectives of the new era,which emphasize the importance of subjecting all trans-border business activities to equitable,efficient,and coordinated taxation.Currently,China's foreign tax credit prescribes in an incompatible pattern;it lacks clear legislative intent,despite marking specific rules with archaic unilateral characters.To reform this regime,legislative principle should reflect the latest consensus on the economic activities'nexus and ensure that the income derived from trans-border transactions falls under a minimum tax.Regarding specific rules,it is strongly suggested that active and passive incomes be distinguished and the equity holding threshold of obtaining indirect credit be lowered.China's foreign tax credit reform should take an inclusive perspective,actively participating in the cooperation between countries.
