How Do American Businesses Generate Tax Avoidance In China?

From 2008 to 2015, US enterprises' net profits in China were remitted to offshore registered places for 160 billion US dollars, and they were remitted in the name of headquarters. However, in China, they made financial reports low net profit growth or loss or no growth, aiming at tax avoidance and tax evasion.

However, the competitiveness of Chinese enterprises is weaker than that of American enterprises in China, paying taxes conscientiously, and avoiding tax by American enterprises in China, resulting in unfair competition between Chinese enterprises and American enterprises in China, which is not conducive to the development of Chinese enterprises.

According to Oxfam's April 14th report, 50 large enterprises in the United States started overseas from 2008 to 2014 with a net profit of 4 trillion US dollars, and only 26.5% of the funds would be paid by the United States, but it was significantly lower than the 35% tax rate.

Of these, $1 trillion and 400 billion entered offshore offshore registration sites, which were not taxed.

The author thinks that

The income of enterprises in China, which accounts for 10% of their global overseas income, is a relatively conservative figure. Based on this, it can be deduced that the tax avoidance funds of American enterprises in China from 2008 to 2014 totaled US $140 billion, an average of US $20 billion per year, so that by the end of 2015, American companies concluded that 160 billion dollars were pferred to offshore.

It is a reasonable data.

According to the 25% tax rate, it is a tax loss of $40 billion.

How do American businesses generate tax avoidance in China?

One way is to consider the patent as an investment rather than an income. As we all know, the cost of the patent is before the formation of the patent, and the cost of the patent protection period, of course, because it has to pay a patent every year.

However, the real main cost is before the patent formation, the annual patent protection fee generally takes the lead.

Many enterprises in the United States have already recovered their costs. In the past few years, they are net profits. How can they be regarded as cost avoidance? A reasonable cost period should be 3 years, that is, the cost of patents will be collected within 3 years. After 3 years, the patent should be paid, and at least 25% of the enterprise income tax should be paid. However, the multinational corporations in the United States have not paid the patent tax.

In fact, before China's business is changed to increase, it will pay the business tax, and it has nothing to do with net profit. If there is production, it will have to pay taxes.

According to this point, the patent should pay taxes on the paction volume. Therefore, the author thinks that the state should recover the patent fees and taxes in the past.

In recent years, the United States has opened up the Swiss bank secrecy system, earning US tax evasion tycoons, money laundering, money laundering and terrorist funds.

Ireland's low tax rate has become one of the destinations for US businesses to evade taxes. The main way of tax evasion is to pfer funds from subsidiaries to overseas headquarters, to pay taxes uniformly by headquarters, while subsidiaries do not have the right to pay taxes, and the headquarters chooses the countries with the lowest tax rates to register, so the tax rate can be much lower.

In addition, American enterprises set up overseas headquarters in offshore areas such as Bermuda and Dubai, and became subsidiaries without funds.

50 global companies in the United States, including tasty, alphabet, Goldman Sachs and so on, their tax evasion has resulted in a loss of $100 billion a year in poor countries worldwide, which exceeds 2 billion 200 million of the population's drinking water and sanitation facilities.

Although the 50 global enterprises in the United States pay only $1 to the federal government, they can get $27 in aid loans, loan guarantees and relief payments. The total amount can reach US $11 trillion and 200 billion, in fact, the tax actually paid is much lower than 35%.

The author believes that the EU only requires that Britain pay strict tax revenue is not enough. It also requires that the global zero tax countries and regions such as Bermuda and Dubai must pay taxes, and not less than 10%, which is the phenomenon of reducing tax avoidance.

It is hoped that China will take this opportunity to find out the tax avoidance problems of multinational corporations in China, so that some taxes can be recovered and the fair competition between pnational corporations and Chinese companies can be enhanced.

Otherwise, Chinese enterprises with relatively low competitiveness will not pay taxes in China, where tax paying and competitive power is stronger, and unfair competition in the tax environment will be formed.

Wu Donghua's resume: distinguished economist, former research fellow of China International Economic Cooperation Institute of the Ministry of Commerce, consultant of the Chinese enterprise going abroad research center of former Ministry of Commerce, and researcher of China Financial think tank.

The above is the tax evasion of the 50 enterprises in the United States, and if some tax avoidance funds are added to the subsidiary companies, the tax evasion of the 50 global enterprises will be even greater.

Similarly, the tax evasion tax of American enterprises in China in the past 9 years is certainly greater than that of the US $160 billion. The author believes that China's regulation and rectification of domestic enterprises without the need to exceed the national treatment for foreign investment should be a clear rule for multinational enterprises, especially the US companies to avoid tax in China. On the one hand, the national tax revenue will affect the growth of business tax due to the value-added tax of business tax. On the other hand, the development of the industry is facing difficulties because of the recent cancellation of export subsidies by China's 7 industries.

Moreover, the European Commission believes that it is meaningless to identify where tax shelters are, and the EU calls for stricter regulations in Britain to pay taxes in all countries.