Focusing on the tax management of overseas investment, this training taught the core principles of overseas taxation, tax jurisdiction, methods to eliminate double taxation, characteristics and sources of overseas income, application of tax treaties, declaration of overseas investment and income information, overseas tax risk management, BEPS 15 action plan and the latest progress. Experts from the United States, the Netherlands, Austria, Australia and Spain shared their countries' practices and experiences in the above fields. This paper summarizes the related contents.
1 defines the theoretical basis of constructing overseas tax system.
Core principles of international taxation. In the process of tax management, the national tax system is generally divided into global tax system and regional tax system. The global tax system taxes all the income of its taxpayers, regardless of whether the income comes from home or abroad. The regional tax system only taxes the income from the country, regardless of whether the person who obtains the income is a resident of the country. Countries generally use these two systems in combination. In global and regional tax systems, it is very important to determine the source of income and the way of taxation. In the global tax system, determining the source of income is related to the issue of overseas tax credit to avoid double taxation, while the regional tax system itself taxes within the scope of income sources. There are two main ways of taxation: net taxation and full taxation.
The role of tax treaties. Tax treaties should not affect the location choice of taxpayers' transnational economic activities and the organizational form of enterprises, but should help the free flow and rational use of capital, labor, goods and services on a global scale. This is also the purpose and purpose of countries actively signing international tax agreements and carrying out extensive international tax cooperation. In order to achieve the above objectives, tax treaties can be applied in the following ways: first, for the permanent institutions of countries with territorial principles, set a threshold for taxing net profits. The second is to reduce the withholding tax rate of all profits. The third is to provide specific ways to eliminate double taxation (such as foreign tax credits or tax exemption arrangements). The fourth is to provide the minimum guarantee of non-discriminatory tax treatment. Fifth, coordinate the tax system between contracting States through special rules, such as changing the rules for confirming the source of profits, so as to solve the problem of double non-taxation.
Ways to eliminate double taxation. The elimination of double taxation was initially solved by corresponding domestic legislation. Many countries have adopted foreign tax credits and exemptions in their domestic laws to eliminate the effects of double taxation. However, due to the different tax concepts and tax sovereignty concepts in different countries, double taxation is still inevitable. In the later period, countries distributed tax rights between tax source countries and resident countries through tax treaties. The agreement can also eliminate double taxation by establishing a foreign tax credit or tax exemption system. In bilateral tax treaties, an agreement can also be reached on the distribution of tax rights for income items.
2. Implement classified management and take independent compliance as the tax strategy.
Promoting taxpayers' self-compliance is the primary goal of tax strategy. Tax authorities in the United States and Australia usually require taxpayers to conduct self-compliance management through their own tax assessment, and take a series of measures to promote tax compliance to avoid post-assessment and inspection. The United States has established the concept of serving taxpayers and put forward the concept of "tax service+tax enforcement = tax compliance". In addition, these countries generally implement a tax compliance risk management model that combines tax compliance with risk management, and formulate control strategies for tax compliance risk according to the characteristics and laws of tax risks. The Australian Taxation Bureau has set the goal for 2020 as four parts: clear and respected relationship, professional and fruitful organization, modern personalized service and easier taxpayer participation.
In terms of institutional setup, tax authorities set up organizational structure, establish institutional system and design work flow "centering on the needs of taxpayers". This reflects that the tax management mode has gradually changed from the initial "tax-oriented" management to the "tax collection and management function", and then changed to the idea of "whole customer" to arrange a series of tax services.
Improving the pertinence of tax collection and management through classified management of tax sources. The Netherlands classifies taxpayers according to different scales: individuals, large companies, small companies and import and export taxpayers. According to different taxpayers, four types of individual tax collection and management institutions have been established. In addition, the key tax sources are professionally managed, and the tax administration institutions of large enterprises are specially set up, which are divided into limited functional models represented by Australia and full-functional models represented by the United States and Spain.
Using risk management to realize the effective use of collection and management resources. Through compliance risk management, the Australian Taxation Bureau looks for potential non-compliance factors, and flexibly adopts personalized responses to compliance risks, so as to improve tax compliance and reduce collection and management costs.
In particular, OECD member countries have formed a hierarchical risk response model for tax risks on the basis of summing up practical experience, which is usually called "pyramid" response model. That is, based on the taxpayer's compliance attitude, different degrees of compliance strategies are adopted.
According to the "pyramid" compliance model, the optimal coping strategies mainly divide taxpayers into four types: voluntary compliance and doing the right thing, efforts but not always compliance, unwillingness to comply but compliance if given attention, and decision not to comply; Correspondingly, the choice of coping strategies is: making compliance easy, helping it to comply, deterring it through discovery, and making full use of legal compulsory measures.
The risk coping method suitable for the "pyramid" mode of gradual coping strategy is the combination of promoting cooperation and strict law enforcement. Effective countermeasures to promote cooperation include: clarifying taxpayers' obligations, making them easy to follow, making power and actions transparent, and providing incentives. It further includes: the tax authorities disclose their risk areas and key taxpayer groups, publicly inform taxpayers in advance which behaviors are unacceptable, announce the scope (form and level) of all penalties for violations to taxpayers, and make it clear that taxpayers and tax authorities are willing to cooperate with taxpayers, and severe law enforcement measures will be used if they do not cooperate.
Improve taxpayers' compliance ability and willingness to participate in quality services. In view of the fact that the complexity of tax law directly leads to the decrease of tax willingness, OECD countries represented by Australia mainly take the following measures:
The first is to implement customer relationship management. The main features of customer management system are: quick browsing (paperless), complete contact records, providing audit clues, data statistics management and database management.
The second is to design website content with taxpayers as the center. Both the Australian Inland Revenue Department and the US Inland Revenue Department have the same "customer-oriented" homepage to guide different types of taxpayers to browse related content, including: individuals, enterprises, non-profit organizations, governments, tax agents, retirement plans/pensions.
The third is to integrate the tax information system. The establishment of a central information system to record the basic information of taxpayers and the detailed information of different taxes will help to reduce the tax compliance cost of taxpayers.
Fourth, actively communicate with taxpayers. Active service can be divided into four steps: error correction, answering questions, active guidance and simplified process.
3 information acquisition mechanism combining third-party data with self-declaration
The United States and Australia have established a national unified and standardized collection and management information platform, which realizes real-time transmission, sharing and utilization of tax-related information through cross-regional and cross-departmental system networking. At the same time, the taxpayer's self-declaration form will be refined, and the domestic and foreign income data declared by domestic residents will be collected. At the same time, compare the internal and external data information, focus on the difference information, and improve the efficiency of collection and management. For example, in the United States, citizens must declare all income and bank or investment accounts inside and outside the United States. Failure to declare overseas income may be considered a crime. At the same time, relevant countries have also adopted effective declaration rules to ensure the accurate source of information in overseas tax management.
In particular, the United States, Britain and other countries also introduced mandatory disclosure rules as an effective supplement to information declaration earlier to deal with the information asymmetry between tax enterprises. The main purpose of mandatory disclosure rules is to provide early information about potential malicious or abusive tax planning schemes, and to identify scheme planners and scheme users. Obtaining relevant information in time in the early stage can improve the effectiveness of tax compliance by tax authorities and enable tax authorities to quickly respond to changes in taxpayer behavior by changing policies, legislation or supervision. Under the disclosure system of tax avoidance schemes in Britain, as of 20 13, of the 2,366 tax avoidance planning arrangements that have been disclosed, 925 have been resolved through legislation. At the same time, with the implementation of this system, the number of similar plans has been declining, and the schemes disclosed in recent years have also been decreasing year by year. Experts from the US Inland Revenue Department believe that for a public transaction, if the transaction may be rejected, the transaction will be required to be disclosed, and the failure to fulfill the disclosure obligation will be punished. These factors will make it impossible for taxpayers to implement the transaction or similar transactions, thus reducing the overall risk of the tax authorities.
When designing the compulsory disclosure system, we need to consider five elements: who must disclose the information, what information must be declared (the scope and content of the declaration obligation), when to declare the information, determine the users of the planning scheme, implementation and how to use the collected information. At the same time, tax authorities should avoid excessive disclosure, which will bring excessive compliance burden to taxpayers.
4. Strengthen the monitoring and management of specific overseas tax risks.
With the increasing cross-border trade and investment, the number of multinational companies is increasing, and the division of labor in supply chain is becoming more and more detailed, which brings more space for cross-border tax planning. According to the conservative estimation of OECD, the loss of global corporate income tax revenue caused by tax base erosion and profit transfer (BEPS) has reached 4%~ 10% of the total global corporate income tax revenue, that is, the annual loss is as high as100 billion ~ 240 billion dollars. In this regard, countries have introduced more detailed and targeted policies to combat cross-border tax evasion.
About the company hanging upside down. In order to prevent enterprises from transferring profits through overseas losses and company inversion, the American tax law stipulates restrictive clauses, including: restricting the reduction of the shareholding ratio of American companies by expanding the share capital of the parent company after merger and acquisition, so as to meet the requirement that the shareholding of American companies should not exceed 80%, and then changing the place of registration; If after overseas mergers and acquisitions, the parent company of the new company is a taxpayer in a third country, such mergers and acquisitions will be restricted; Strengthen law enforcement, unless more than 25% of the new company's total business is located in a certain country or region, it is forbidden to move the company's registered place to that place; Strictly limit the tax incentives for companies that move out of their registered places. The formulation of these rules will make multinational companies more cautious in tax planning.
Abuse of tax agreements. Although overseas tax risks are not necessarily caused by tax treaties, the asymmetric application of tax treaties due to differences in domestic laws, the failure of some countries to exercise tax rights in distributing profits, or the possible restrictions on the application of domestic anti-abuse rules in tax treaties will all lead to the possibility of enterprises abusing the agreements. In this regard, countries should formulate general anti-abuse rules in their domestic legislation, and the OECD model tax treaty also introduces anti-abuse rules such as beneficial owners.
On mixed mismatch arrangement. Multinational companies take advantage of the differences in tax treatment between two or more tax jurisdictions on mixed entities (mixed, reverse mixed, etc.). ), dual resident entities or hybrid instruments (hybrid financial instruments such as redeemable preferred shares, convertible bonds, interest-free loans and repurchase arrangements). ) in order to achieve the mismatch result of one party recklessly deducting the income of the other party or double deduction. In dealing with the above problems, firstly, it is suggested that when a sum of money is not included in the taxable income in the tax jurisdiction where the payee is located or the sum can be deducted in another tax jurisdiction, the paying country should refuse to deduct the sum before tax; If the tax jurisdiction where the payee is located does not carry out the above treatment, the tax jurisdiction of the other party may require the deductible amount to be included in the income or refuse to deduct it repeatedly; In terms of tax treaties, it is suggested to add new clauses and detailed notes to ensure that the income of such entities is not regarded as the income of residents of the two countries.
About controlled foreign enterprises (CFC). Taxpayers who have control over overseas subsidiaries can transfer the tax base of their resident countries or other countries to a controlled overseas enterprise through related party financing or functional outsourcing, and transfer their income or assets to subsidiaries in low-tax areas, thus creating the risk of profit transfer and long-term deferred tax payment. Making CFC rules can ensure that profits remain in the tax base of the parent company and protect the tax revenue of the parent jurisdiction.
About the financing arrangement within the group. Risks may come from three basic situations: the Group transfers more third-party debts to countries with high tax rates, the Group generates interest deduction beyond the actual third-party interest expenses through intra-group loans, and the Group uses third-party or intra-group financing to fund tax-free income. The countermeasures are as follows: First, based on the fixed deduction rate rule, limit the sum of an entity's pre-tax deductible interest and economically equivalent interest payment to a limited percentage of the entity's profit before interest, tax, depreciation and amortization (EBITDA) (suggestion10% ~ 30%); Second, through the supplement of the group deduction rate rules, entities whose net interest expenses are higher than the national fixed deduction rate are allowed to raise the maximum interest deduction limit to the level of the group's global net interest /EBITDA ratio.