Hebei Cixian Procuratorate For Tax System Cadres To Prevent Rule Of Law Education Classes

Recently,

The procurator of the Cixian provincial procuratorate gave a vivid lesson in the prevention of duty crimes by more than 100 cadres and staff members of the county's tax system.

Prevention of publicity month.

In order to ensure the integrity of the cadres and workers in the county, the hospital plans to use the time of the month before the Spring Festival to carry out preventive publicity for 13 law enforcement units in the county, and to educate and guide these units.

Build a clean ideological line and stay away from duty crimes.

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The sixth special tax adjustment of the enterprise income tax law stipulates six adjustment measures: pfer pricing, advance pricing arrangement, cost sharing agreement, capital weakness, controlled foreign enterprises and general anti tax avoidance.

Generally, anti tax avoidance can be regarded as a sole measure for the first five special anti avoidance measures, and also the last "barrier" of China's international tax administration.

To be able to do something, it must be a measure of small connotation and wide extension. It must be characterized by "principle". Therefore, unlike the first five measures, GAAR has its own specific provisions in the tax law.

The introduction of the measures has further improved the legal system of anti tax avoidance in China, which makes the operation of GAAR more legal.

The measures are issued in the form of the order of the General Administration of taxation. They belong to the "departmental rules", second only to laws and regulations.

In the future, if there are opportunities to revise the law, such as amending the enterprise income tax law and other laws and regulations, we will also actively recommend that we increase or further refine the anti avoidance provisions.

First of all, the measures further regulate and clarify the applicable scope, standard of judgement, adjustment method, working procedure, dispute handling and other related issues of the general tax avoidance measures adopted by the tax authorities, so as to provide clear rules for the implementation of GAAR by the tax authorities.

Secondly, the definition of "tax interest", the main features of tax avoidance arrangements, and the specific methods of tax adjustment are clarified in the "measures", which will help tax authorities more accurately grasp the scale of general anti avoidance in practice.

Third, the fifth rule of the measures clearly states that the tax authorities should take a similar arrangement with a reasonable commercial purpose and economic essence as the benchmark, and "substance is more important than form" as an important principle of GAAR.

The principle of "substance over form" is the legislative principle of many countries, not just for general anti tax avoidance. Some countries have written this principle to the basic law of taxation.

The introduction of the principle of "substance over form" and "reasonable commercial purpose" in the "measures" are of great significance for enriching the connotation of China's anti avoidance laws.

GAAR has a deterrent effect. Launching GAAR needs to be very prudent.

This is also determined by GAAR's own characteristics.

Other special anti tax avoidance or tax related measures are generally very clear, and in order to achieve the goal of GAAR, countries do not elaborate on them. Basically, they adopt two abstract principles: "reasonable business purpose" and "substance is more important than form".

Under such circumstances, how to ensure the unified and standardized implementation of tax authorities is particularly important.

In many countries, the initiation of general anti tax avoidance investigation requires the director of Taxation to sign in person, and it needs to be heard by a special case audit committee.

Although there is no description in the "measures", we will have an expert review procedure when it is specifically implemented. This is an internal working mechanism for special tax adjustment in China.

The principle of "substance is more important than form" and "reasonable commercial purpose" are the legal principles that we learn from abroad.

Both of them have the characteristics of abstraction and subjectivity, but they do not mean that there is no objective standard.

Here, we emphasize that the tax authorities should combine the two in the assessment of specific general anti tax avoidance cases. At the same time, we should use objective tests and economic substantive tests to achieve the objective and fair results of the taxpayers.

The principle of "reasonable commercial purpose" has subjective judgement.

For example, whether an enterprise has an aim in implementing an arrangement, whether it has this purpose or that purpose, there may be some subjective factors in the judgment of tax authorities.

But there is no objective standard to follow.

If an enterprise has achieved the goal of reducing taxes or postponing paying taxes due to an arrangement, its business activities have not been affected or no substantive changes have taken place. It can be concluded that tax avoidance is the main purpose, which is actually an objective criterion.

"Substance is more important than form" is the basic tax law principle of many countries. It is compatible with the different criteria of subjectivity and objectivity to a certain extent.

Why do we add this principle? This is also related to the BEPS action plan, because the whole purpose and rule of BEPS is the matching of tax and economic essence.

That is to say, the tax revenue of enterprises must match with the essence of their economic activities. They should not have no economic essence, but they have tax revenue, or there is no real tax in economic substance.

We have more objective basis in measuring economic substance and tax revenue.

For example, some real estate enterprises, whose overseas affiliates have registered their brands only in overseas tax shelters, have legal ownership, but the development, value enhancement, maintenance, utilization and protection of the brand are all undertaken by domestic enterprises. The overseas affiliates do not contribute to the value creation of the brand. Without economic essence, domestic enterprises should not pay royalties to them.