InternationalTaxation国际税收试卷3.doc

试 题 三 I. True or false (total points : 10, 2points/each)1. The direct credit is a credit granted to a domestic corporation for the foreign income taxes paid by a foreign affiliated company.( )2. Generally, many countries use the Permanent Establishment criterion to identify the residence of legal entity.( )3. According to the UN model treaty, contracting states may adopt tie-breaker rules to identify the residence of legal entity.( )4. OECD model treaty generally adopts the attraction principle to identify the income of PE.( )5. If the income of a Japanese resident was borne by a PE set by the Japanese company in China, the income can be levied by the government of China. ( ) Please explain the following key terms. (12 marks,3 marks for each key term )1.Thin capitalization2. Source tax jurisdiction3. Treaty shopping4. Opposite tax avoidance. Questions ( 28 marks )1. Please explain the the tie-breaker rules in brief .(5 marks)2. Please have a brief discussion on the types of internenational double taxation .(5 marks) 3. Please explain the differences between tax evasion and tax avoidance.(5 marks) 4. Please explain the operation of the base company in tax heaven by a figure.(5 marks)5. Please explain the main features of arms length principle and principle of Global Apportionment. (8 marks). Case Study ( 20 marks )1. A Thai doctor provides medical service in China. And(1) he has set up a clinic in China and derived income from his medical services.(2) he has not set up a clinic and stayed for a period or periods aggregating less than 183 days within any twelve-month period, but derived medical service income during that period.(3) his income from medical service is paid by an individual or enterprise. (4) his income from medical service is borne by a representative office set by Thailand resident company.Can Chienses government exercise its source jurisdiction over the Thai doctor under the above cases? Please explain the reasons. （10 marks）2RCo, a transnational company sets a wholly owned subsidiary SubA in country X, Xs income tax rate is 33%, withholding tax rate is 20%. CoR invested 1000 in SubA at first, then lend 2000 to SubA, the interest rate is 10%. SubAs yearly income is 500 and expenses are 200 . (1) Which kind of tax avoidance technique has been used in the above case?(2) Compare the transnational corporations income tax burden under market price and transfer price.(3) Which kind of anti-avoidance measure could be taken? ( 10 marks)V. Computation ( 30 marks) 1. Assume M, a taxpayer in country A, has 9000 of domestic-source income and 8000 of income from country B, and 3000 from country C . Country B levies tax at the rate of 20%, country C at the rate of 40%, Country A levies income tax at a extra- progressive rate as follows.(20marks)Taxable incomeTax rate0-500010%5000-10 00020%10 000-(that part of income in excess of 10 000)30%Questions: 1) If country A doesnt adopt any method to eliminate the double taxation, how many taxes M should pay?(6marks)2) If country A adopts deduction method, how many taxes M should pay to country A? (6marks)3) If country A adopts full exemption method, how many taxes M should pay to country A? (4marks)4) If country A adopts the method of exemption with progression, how many taxes M should pay to country A? (4marks) 2. Corporation RCo is established in country A, and earns 20 in some taxable year, the income tax in country A is 40%. RCo has a branch in country B, which has the income of 10 and country Bs normal tax rate is 30%. Country B offers halved tax rate to the branch. Country A is willing to give a tax sparing credit to Rco. Please calculate the tax RCo should pay to Country A.(10marks) 答案及评分标准 I.True and False ( 10marks, 2points/each): Please explain the following key terms. (12 marks,3 marks for each key term )1. Thin capitalization: A company said to be thinly capitalized when its capital is made up of a much greater proportion of debt than equity. (3 mark).2. Source tax jurisdiction： Income may be taxable under the tax laws of a country because of a nexus between that country and the activies that generated the income.(2 marks) A jurisdiction claim based on such a nexus is called source tax jurisdiction.(1 marks)3.Treaty shopping occurs when a person who is not a resident of either country (1 mark) seeks certain benefits (1 mark )under the income tax treaty between the two countries(1 mark) .4. Opposite tax avoidance means that taxpayers move to the jurisdiction with higher tax(1marks) and avoid the jurisdiction with lower tax（1marks），which isdifferent from the other tax avoidance(1marks). Questions ( 28 marks )1.(1)permanent home available to him (1 mark); (2) personal and economic relations are closer (centre of vital interests)(1 mark); (3) an habitual abode (1 mark); (4) national (1 mark); (5) mutual agreement (1 mark)2. Internenational double taxation mainly include two types of double taxation, juridical double taxation and economic double taxation(2marks). Which mean the same or different subjects of taxing power, levy twice or more on the same taxpayer or taxable objects(3marks).3. Tax evasion is illegal, and uses criminal means, and there are punishments on the taxpayer (2 marks). Tax avoidance is legal,and uses acceptable tax planning and it requires improvements on tax laws (3 marks) 4. (5 marks)Parent Company in Country I with High tax Base Company in Tax HavenSubsidiary in Country II with high taxSubsidiary inCountry III with high taxcontrolcontrolFalse purchasing transfer sales profitFalse salestProfits transferReal business5. ALP is set according to the market economy theory and its price is the real market price, which reflects the principle of equity(1 mark).It often imposes unreasonable burdens of proof on taxpayers(1 mark).It is extremely time-consuming and expensive to enforces(1 mark). ALP is likely to continue to be the internationally accepted and the most objective approach for resolving transfer pricing issues except in special circumstances(1 mark).FA is more easily to enforces and it also avoids some of the difficult audit problems.The arbitrariness of the predetermined formulas makes it difficult to reflect the particular circumstances of each multinational enterprises(1 mark).It relies heavily on access to foreign-based information.Substantial cooperation among governments would be needed to solve these problems(1 mark).FA is used by some subnational jurisdictions(1 mark). And it is likely to continue to be an important part of the international tax scene(1 mark). Case Study ( 20 marks )1. (1) Chinese government can exercise SJ since the Thai doctor has a PE in China (2 marks)(2) Chinese government cannot exercise SJ because the Thai doctor stays for a period or periods aggregating no more than 183 days ( 3 marks)(3) Chinese government can exercise SJ if the individual or enterprise has Chinese resident status (3 marks)(4) Chinese government can exercise SJ since the income is paid by a representative office set by the Thai resident company.(2 marks)2 (1) Capital thinning (1 mark)(2) tax under creditingInterest: 2000 x 10% =200 Taxable income: 500-200-200=100(1mark)Income tax: 100x33%=33 (1 mark)Interest withholding tax: 200x20%= 40 (1mark)Total tax: 33+40=73( 1mark) tax under equityTaxable income: 500-200=300Income tax: 300x 33%=99 (1mark)Dividend withholding tax: (300-99)x20% =40.2 (1 mark)Total tax: 99+40.2=130.2(1mark)Tax differences: 130.2-73=57.2(1mark) (3) Anti capital thinning measures (1 mark). Computation (30 marks)一 . 1 If country A doesnt adopt any method to eliminate the double taxation, Foreign-source income from country B: 8 000Foreign tax(B country) : 8 00020%=1600(1 mark)Foreign-source income from country C: 3 000Foreign tax(C country) : 3 00040%=1200(1 mark)Net Domestic income: 9 000+8 000+3 000=20 000(1mark)Domestic tax: 500010%+10 00020%+500030% = 4000(2 mark)The total domestic and foreign tax: 4000+1600+1200=6800(1 mark) 2 If country A adopts deduction method, Foreign-source income from country B: 8 000Foreign tax(B country) : 8 00020%=1600 Foreign-source income from country C: 3 000Foreign tax(C country) : 3 00040%=1200 Net Domestic income: 20 00016001200= 16400(2 mark)Domestic tax: 500010%+1000020%+140030% =2920(2 mark)The total domestic and foreign tax: 2920+1600+1200= 5720 (2 mark)3 If cou