国际税收整理

课后习题整理1 Base for international tax: country taxation 1. What is international tax? What does it mainly address?答：International tax means a series of tax issues resulting of different tax rules and conflicting jurisdictions made by countries, and solutions. The base of International tax is different countries taxation.2 International income taxation1. How does a country generally design its income taxation system?答：territorial(属地): taxation only of in-country income,e.g. Hong Kong; residency(属人): taxation of all income of residents and/or citizens; exclusionary(例外): specific inclusion or exclusion of certain amounts, classes, or items of income in/from the base of taxation; Hybrid(混合): e.g. USA , UK2. Why is it important to make clear source of income?答：in a territorial system, source often determines whether or not the income is taxed; source of income is also important in residency systems that grant crs for taxes of other jurisdictions.3 Tax residence1. What is the main difference between a tax resident and a non-tax resident for tax liability purpose?答：a tax resident: world-wide tax liability; a non-tax resident: limited tax liability.2. Can you name some tests in determining whether a person is a resident?答：For corporation: place-of-incorporation test , place-of-management test, residence-of-the shareholders test;For individual: a fact-and-circumstances test/ domicile test , number of days test, intention test. 3. Take an example to prove how different countries apply differing tests to judge a persons residence?答：China: for individual: domicile test , number of days test(a full year); for corporation: place-of-incorporation test or place-of-management test. Ireland: for individual: number of days test(183 days) ,domicile test for corporation: now :place-of-incorporation test past :place-of-management test.4 Income source jurisdiction and rules1. What is source jurisdiction?答：Its an important form of state tax sovereignty. It determines that income from home country is subject to tax.2. How to determine the source of employment and personal services income?答：According to the place of proving services. For independent services, it refers to the fixed place; For dependent services, it refers to the place where services are performed. According to the payment place of service income.3. How to determine the source of location of business income? What is PE?答：There are chiefly two test: one is the PE rule , the other is the place of transaction or trade or signing contracts rule. PE means permanent establishment, and it refers to a fixed place of business,such as an office, branch, factory or mine, which generally gives rise to income or value added tax liability in a particular jurisdiction, a dependent agent or an employee is also treated as a PE. And PE is an important basis to judge whether business income is taxable by a country.4. How to determine the source of investment income?答：For dividend, test: residence country of the dividend payer; For interest, test: generally: residence country of the interest payer; Some country: signing place of loan contract, or residence country of loaner. For royalties, test: place of usage; residence country of royalty owner; residence country of royalty payer. For rents, test: usage place of the property; signing place of renting contract; residence country of rent payer.5. International double taxation and relief 1. What is International double taxation?答：Double taxation occurs when tax is paid more than once by two or more jurisdictions on the same taxable income or asset ,and it can be legal or economic.国际重复征税是指两个或者两个以上的国家、地区,对同一或不同跨过纳税人的同一跨国征税对象征收相同或相似的所得税。一般包括法律性重复征税和经济重复征税。2. What is the main difference between legal International double taxation and economic International double taxation?答：Legal double taxation taxes the same taxable earning or asset. Economic double taxation taxes different taxpayers.法律性重复征税：同一跨国纳税人（总公司、分公司属于同一纳税人）；经济重复征税：总公司、分公司分属不同跨国纳税人。3. Take an example to prove International double taxation arising from the same tax jurisdiction and relief.答：4. What approaches are used to solve International double taxation resulting from residence-source conflicts?答：Tax treaties of OECD and the UN can be used to solve international double taxation; there is also uniformity in source rules and international practices for solving the problem. Besides,the deduction method, the exemption method and the credit method are another means of solving the problem . Unilateral,bilateral, multilateral approaches.5. What is the main difference between deduction method and credit method?答：The credit method : foreign taxes paid by a resident taxpayer serve to reduce domestic taxes . The deduction method : it allows residents and citizens to deduct foreign taxes paid as a current expense in computing their taxable worldwide income.抵免法：将国内国外所得乘以税率减去在国外所得取得的收入的税额。扣除法：税前扣除视同费用；6. Which specific relief methods does international community agree to?答：The OECD and the UN models only authorize the credit and exemption methods, not the deduction method .6. International tax avoidance and tax haven1. What is tax haven.答：a country or territory which has no income tax or little income taxation, and is easy to be used to avoid or evade taxation of relevant countries or territories.2. How many types of tax havens are there in the world?答：Nil-tax havens: no income tax, no capital gains tax, no inheritance tax . Foreign source exempt havens: tax you on locally derived income only. Law-tax havens : some may have special concessions ;some uses tax double treaties.3. Name some Non-tax features of tax heavens.答：Privacy：financial affairs be kept private from prying eyes. Easy of residence: easy to obtain permission to live. political stability ; convenient communications: good telephone and broadband internet access and easy travel. Lifestyle factors: good schooling and climate and so on.4. How does an international taxpayer make use of a tax haven?答：make use of transfer pricing to transfer profit;abuse international tax treaty;make use of trust investment to transfer property;set up internal insurance company;thin capitalization;choose advantaged forms of enterprise organization;Emigration;5. Does China has anti-tax-haven rules?答：Yes. In CFC rules.6. What are the advantages of being a tax haven?答：attract FPI; promote employment; develop economy; reduce taxation; promote cultural exchanges.7. What are the reasons for some jurisdictions desiring to be tax havens?答：There are many advantages of being a tax haven. For example: attract FPI; promote employment; develop economy; reduce taxation; promote cultural exchanges.7. International transfer pricing and rules1. What is international transfer pricing ?答：International transfer pricing refers to a kind of non-pricing action taken by related parties within the group while carrying on purchasing and selling business. It can be used as an important instrument of avoiding tax .2. Take an example to prove that international transfer pricing can be used to avoid international tax?答：3. What are the main contents of international transfer pricing rules ?答：A country will set up International transfer pricing rules to prevent transnational enterprise using transfer pricing to evade tax. It contains those details:Adjustment: Arms length price (1.CUP, 2.RP, 3.CP); Formulary apportionment method; Advanced pricing agreement. 4. What is formulary apportionment method?答：Attributes profit or loss to each jurisdiction based on factors such as the proportion of sales 、assets、or payrolls .5. Talk about transfer pricing rules in China ?答：8. Controlled foreign corporation and rules1. How does a multinational firm use a CFC to avoid tax ?答：Companies form foreign subsidiaries in tax havens and shift income to those subsidiaries ,the tax was avoided until the tax haven country distributes a dividend to the shareholding company .E.g. CCo is a resident corporation in China with tax rate 25%, while BCo is a company in the British Virgin Islands with tax rate 0, which is jointly held 100% of total shares by CCo.1)If CCo sells the products directly to HCO in Hong Kong at 8 million, and the cost of these products is 4 million, the amount of tax is 1 million.2)If CCo sells products to BCo at non-market price 4 million,and the cost of these products is 4 million. And BCo sells the products to a company in Hong Kong at market price 8 million. If the profit 4 million isnt distributed, the total amout of tax is 0.2. What is CFC?答： CFC are those corporations which are registered in low-tax or no-tax countries and regions ,but controlled by native residents and used for tax avoidance. 3. What is the relationship between deferral system and CFC rules ?答：Deferral system is the basis of CFC rules , generally speaking, no deferral system, no CFC rules. And china is a exception that has no deferral system but has CFC rules . 4. What are the main contents of a countrys CFC rules?答：control test. Different countries have different standards ,in China, the test is controlled by all shareholders at 50% and single at 10%. tax haven tests. There are designated jurisdiction(blacklist、whitelist、greylist) and global approach. taxpayer definition. recognition of taxable income. exception rules. CFC derives income through active business activities ,located in a non-low-tax rate country or region which is designated by the SAT ; annual profits of the CFC are not more than 5 million . 5. When was chinas CFC rules established ?答：2008.6. Can you name some differences between china and foreign jurisdictions for purposes of CFC rules ?答：US CFC rules aims at preventing its citizens and corporations from artificially deferring otherwise taxable income through use of foreign entities. UK CFC rules taxes on undistributed income of low tax controlled foreign companies of which they are shareholders. German CFC rules applies to all its shareholders matters nothing with its holding percentage as long as it meets two tests: firstly , German residents control non-German corporation , secondly ,that corporation is taxed at a rate of less than 25% on the passive income.7. Must a foreign corporation which is established in a tax haven and controlled by our residents be a CFC for our tax purpose ?答：No. If not satisfying some condition , the corporation wont be a CFC for our tax purpose. The conditions are listed as following: the foreign corporation is not owned about 50% by all its shareholders or 10% by its single shareholder; the income is derived from active activities ;the annual profits are not more than RMB 5 million. 9. Thin capitalization and rules1. Whats thin capitalization ?答：A company said to be thinly capitalised when its capital is made up of a much greater proportion of debt than equity, ie. its gearing, or leverage, is too high. Thin capitalization is one of the most important tax avoidance techniques adopted by multi-national firms. It can be divided into domestic type and international type.It occurs when an entitys capital is made up of a much greater proportion of debt than equity. The capitalization is one of the most important tax avoidance techniques adopted by multi-national firms.2. Give an example to prove that capitalization can be used to avoid tax.答：Theres an entity B, a resident corporation in china , with a registered capital of 100 million . And it subjects to the enterprise income tax rate of 25%. Besides , the normal interest rate is about 10%. Each year B gains a seal income of 800 million at a cost of 500 million. Recently B borrowed 400 million from related corporation C at an interest rate of 20% for the advancement of its business. Now the interest is 8 million, and the income tax is 73 million. When B increase its load from C to 800 million ,the interest comes to an amount of 16 million, and the income tax is 71 million. The corporation B gains a benefit of 2 million by avoiding income tax.3. Whats the main contents of thin capitalization rules ?答：The thin capitalization rules contains substances as following :Fixed debt-to-equity ratio;how to compute the excess interest ;the taxpayers who subject to the rules;exception rules. exceptions where the enterprise can deduct interest expenses;Definition of interest.4. whats the main features of the USA capitalization rules ?答：The deductibility of interest ;the treasury report ;taxpayers subjects to the rules ;scope of the rules ; approaches to determine the amount of the disallowed interest ;measures define payment not based on arms length .5. Talk about thin capitalization rules in China .答：The capitalization comes into effect in china in 2008, with the implement of the Notice of SAT.According to the notice, the enterprise may deduct the interest actually paid to the related party within the debt-equity ratio. And the disallowed interest may also be deducted if it satisfies those two conditions. Firstly, the enterprise proves that the related party loan complies with arms length principle. Secondly, the actual tax rate of the borrowing enterprise isnt higher than that of o related party lender within China . 10. International tax treaty1.What is international tax treaty?What categories of tax treaty are there?答：International tax treaty means the tax agreement signed between countries on tax issues to reduce double taxation and eliminate tax evasion. Most international tax treaties are bilateral、comprehensive income tax treaties. It can be divided into bilateral or multilateral, comprehensive or single. And it may cover income taxes, value added taxes, inheritance taxes, or other taxes.2.What tax benefits can tax treaties offer international taxpayers?答：Tax treaties can offer international taxation to avoid double taxation, enjoy preferential tax rate of withholding tax and tax exemptions as benefits.3.Which should be given priority when the treaty rule conflicts with the domestic tax rule?答：When the treaty rule conflicts with the domestic tax rule, firstly international tax law takes precedence over the principles. Secondly we should follow low principles, the lower local law rate prevails.4.What contents does a typical international tax treaty contain?答：A typical international tax treaty contains the determine the scope, the definition of important concepts, the tax disputes resolution, the division of Tax Collection and the preventation of fiscal evation . contain: （1）scope definition: taxes covered, tax resident,PE; （2）key concepts definition: e.g. PE; （3）tax disputes resolution; （4）tax discrimination; （5）withholding tax rates setting; （6）prevention of fiscal evasion .5.What is treaty shopping?Can you give an example to prove it?答：Treaty shopping refers to the residents of a third country setting up an intermediary type of body to enjoy the tax benefits between two other countries. It refers to a situation where a person who is resident in one country and earns income from another country, is able to benefit from a tax treaty between the source country and yet another country.0%0%例子：CayCo(母）UKCo（子）USCo30%CayCo Enjoy a 0% of the US and UK tax treaty.6.Talk about anti-treaty shopping rules答：Term explanation注： 意思是“名词解说”， 不光是名词定义解释，在考试的时候要写的多一点，一般可以包括三部分内容：1.属于哪一块内容；2.本身定义；3.其他，如作用、范围、中国如何等等。Thin capitalization : 资本弱化 A company said to be thinly capitalised when its capital is made up of a much greater proportion of debt than equity, ie. its gearing, or leverage, is too high. Thin capitalization is one of the most important tax avoidance techniques adopted by multi-national firms. It can be divided into domestic type and international type.Foreign tax credit :外国税收抵免指居民就其在海外缴纳的税款从其应纳税额中扣除，它分为直接抵免与间接抵免，又可分为完全抵免制度与部分抵免制度。Withholding tax : 预提税 the important part of income tax ,a tax levied on income (interests and dividends) from securities owned by a non-resident. And it can be divided into interest withholding tax、dividend withholding tax and other.International tax treaty : 国际税收协定 it means the tax agreement signed between countries on tax issues to reduce double taxation and eliminate tax evasion. It can be divided into single-item tax treaty or comprehensive tax treaty.Deferral system: 延迟扣税制度 means a preferential tax policy that a country in order to encourage domestic enterprises to invest overseas to open up marketsInternational transfer pricing: 国际转让定价 It refers to a kind of non-market pricing action taken by related parties within the group in order to transfer profits from higher-tax countries to low-tax countries.It is an important instrument of avoiding tax.tax residence:税收居民 Its a standard to determine whether a person should undertake unlimited tax liability.Different countries have Different standard on definition of taxes.Legal double taxation 法律型重复征税： it is a way of international double taxation. It arises when tow or more tax jurisdictions prescribe comparable taxes for the same taxable entity, with respect to the same taxable earnings or asset. Taxpayer must be same.Economic double taxation经济型重复征税: it is a way of international double taxation. It arises when the same income is taxed at corporate and at stockholder level. Taxpayer can be different.Resident tax jurisdiction居民税收管辖权: it is the jurisdiction of Taxation. According to the principle of the person establish tax