InternationalTaxation国际税收试卷2.doc

试 题 二 I. True or false (10 marks, 2marks/each)1. OECD model treaty generally adopts the attraction principle to identify the income of PE.( )2. Generally, many countries use the PE criterion to identify the residence of legal entity.( )3. The indirect credit is a credit granted to a domestic corporation for the foreign income taxes paid by a foreign affiliated company.( )4. Source country may take methods of exemption or credit to its resident foreign income. ( )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. International Double Taxation2. Compareable uncontrolled price method 3. Treaty shopping4. Permanent establishment. Questions ( 28 marks )1. How to determine an individuals resident status if he is a resident of both Contracting states according to OECD Model Tax Convention? (5 marks)2 International double taxation can arise from a variety of causes. Please explain three types of double taxation arise from conflicts over tax jurisdiction. ( 6 marks)3. What principle is adopted by two contracting states to eliminate the internataional double taxation on dividend, interest and royalties. (3 marks)4. Please explain the operation of a base company by a figure.(6 marks)4. Please explain what methods can be used by multinational companies to avoid their tax burden . (8 marks). Case Study ( 20 marks )1. A Japanese individual resident was employed in Beijing Taihua Company from March 1 2002 to Oct. 1 2002. He got dependent service income since he provided technology services to the above company. In which cases the Beijing tax bureau could levy income tax on this person? ( 9 marks)2、RCo, 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. ( 11 marks) V. Computation ( 30 marks)1.There is a company L situated in Country A, and it has branches M,N in Country B and C respectively. In a taxable year, L and M,N has the following income:CountryCompanyTaxable incomeApplicable Tax rate AL1000 30% BMInterest income 10020%Business income 50030% CNRoyalty income 60015%Transfer property income 100040%（一） If country A doesnt adopt any method to eliminate the double taxation, how many taxes A should pay? （二）If country A adopts overall credit limitation to eliminate the double taxation, how many taxes A should pay? （三）If country A adopts pre-country limitation, how many taxes A should pay? （四） If country A adopts item by item limitation, how many taxes A should pay?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. international double taxation has been defined as the imposition of comparable income (property) taxes by two or more sovereign countries on the same item of income (including capital gains or property value) of the same taxable person for the same taxable period. (3 mark). 2. CUP compares the price at which a controlled transaction is conducted to the price at which a comparable uncontrolled transaction is conducted. (3marks)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. PE:a concept used to determinte when an enterprise has sufficient connection with a country to subject it to tax on its income arrtibutable to the PE. (3 mark). 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. (1) source-source conflicts: two or more countries assert the right to tax the same income of a taxpayer because they all claim income is occurred in their country (2 marks)(2) residence-residence conflicts: two or more countries assert the right to tax the same income of a taxpayer because they claim the taxpayer is a resident of theiry country (2marks)(3) residence-source conflicts: one country asserts the right to tax foreignsource income of a taxpayer because the taxpayer is a resident of that county, and another country asserts the right to tax the same income because the source of the income is in that country (2 marks)3. The principle of Tax sharing :The contracting state and the other contracting state can both tax on dividend, interest and royalties. (3 marks) 4. (6 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. It mainly includes the following techniques: transfer pricing, tax avoidance in tax havens, avoiding to be a permanent establishment, transfer objects between permanent establishments,avoiding to be a PE, opposite tax avoidance,thin capitalization , Choosing between establishing a branch and subsidiary.(1marks/each). Case Study ( 20 marks )1.(1)If the income was paid by Beijing company, and the company was a Chinese resident. (3 mark)(2)If the income was borne by a PE set by the Japanese company. (3 mark)(3)If the income was borne by the Japanese company but that person stayed in China exceeding 183 days. (3 mark)2.(1) Capital thinning (3 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) . Computation (30 marks)一 . 1 If country A doesnt adopt any method to eliminate the double taxation, Foreign-source income from country B: Foreign tax(B country) : 10020%+50030%=170 (1 mark)Foreign-source income from country C: Foreign tax(C country) : 60015% + 1 00040%= 490 (1 mark)Net Domestic income: 1 000+600+1600=32 00(1mark)Domestic tax: 320030% = 960(1 mark)The total domestic and foreign tax: 170+490+960= 1620 (1 mark) 2 If country A adoptsoverall credit method, Foreign tax(B country) : 10020%+50030%=170 Foreign-source income from country C: Foreign tax(C country) : 60015% + 1 00040%= 490 Foreign tax 170+490=660 (1 mark)Credit limitation 220030%=660 (0.5 mark)Credit: 660=660 (0.5 mark) The total domestic and foreign tax: 960-660+660=960 (1 mark)3 If country A adopts the country by country method,Foreign-source income from country B: Foreign tax(B country) : 10020%+50030%=170 Credit limitation: 60030%=180 (1 mark)Credit :170180(0.5 mark)Foreign-source income from country C: Foreign tax(C country) : 60015% + 1 00040%= 490 (1 mark)Credit limitation: 160030%=480 (1 mark)Credit :480490 (0.5 mark)