《国际税收整理》word版

课后习题整理

一．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. International tax in a board sense covers not only income taxes but also turnover taxes, etc.

二．International income taxation

1.How does a country generally design its income taxation system?

答：①territorial(属地): taxation only of in-country income,e.g. Hong Kong;

②residency(属人): taxation of all income of residents and/or citizens;

③exclusionary(例外): specific inclusion or exclusion of certain amounts, classes, or items of income in/from the base of taxation;

④Hybrid(混合): e.g. USA , UK

2.Why is it important to make clear source of income?

答：①in a territorial system, source often determines whether or not the income is taxed; ②source of income is also important in residency systems that grant crs for taxes of other jurisdictions.

三．Tax residence

1.What is the main difference between a tax resident and a non-tax resident for tax liability purpose?

答：①a tax resident: world-wide tax liability;

②a non-tax resident: limited tax liability.

2.Can you name some tests in determining whether a person is a resident?答：①For corporation:

place-of-incorporation test , place-of-management test,

residence-of-the shareholders test;

②For 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 person's 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.

四．Income source jurisdiction and rules

1.What is source jurisdiction?

答：It's 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：①According 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.

②According to the payment place of service income.

3.How to determine the source of location of business income? What is PE?答：①There are chiefly two test: one is the PE rule , the other is the place of transaction or trade or signing contracts rule.

②PE 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：①For dividend, test: residence country of the dividend payer;

②For interest, test: generally: residence country of the interest payer;

Some country: signing place of loan contract, or residence country of loaner.

③For royalties, test: place of usage; residence country of royalty owner; residence country of royalty payer.

④For rents, test: usage place of the property; signing place of renting contract; residence country of rent payer.

五.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：①Legal double taxation taxes the same taxable earning or asset.

②Economic 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：①The credit method : foreign taxes paid by a resident taxpayer serve to reduce domestic taxes .

②The 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 .

六.International tax avoidance and tax haven

1.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：①Nil-tax havens: no income tax, no capital gains tax, no inheritance tax .

②Foreign source exempt havens: tax you on locally derived income only.

③Law-tax havens : some may have special concessions ;some uses tax double treaties.

https://www.360docs.net/doc/0a12928206.html, 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.

七.International transfer pricing and rules

1.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: Arm's 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：

八.Controlled foreign corporation and rules

1.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 isn't 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 country's CFC rules?

答：①control test. Different countries have different standards ,in China, the test is controlled by all shareholders at 50% and single at 10%.

②tax haven tests. There are designated jurisdiction(blacklist、whitelist、greylist) and global approach.

③taxpayer definition.

④recognition of taxable income.

⑤exception 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 china's 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 won’t 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.

九.Thin capitalization and rules

1.What's 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 entity's 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：There's 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.What's the main contents of thin capitalization rules ?

答：The thin capitalization rules contains substances as following :

①Fixed debt-to-equity ratio;

②how to compute the excess interest ;

③the taxpayers who subject to the rules;

④exception rules. exceptions where the enterprise can deduct interest expenses;

⑤Definition of interest.

4.what's 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 arm’s 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 arm's length principle. Secondly, the actual tax rate of the borrowing

enterprise isn't higher than that of o related party lender within China .

十.International tax treaty

1.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.

30%

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 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 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. Deferral system: 延迟扣税制度 The practice of subjecting the profits derived from foreign investment through foreign corporations to tax only when the profits are remitted to the resident country of the investor. International 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 while carrying on purchasing and selling business. It is a business strategy and can be used as an important instrument of avoiding tax.

tax residence:税收居民 It's a criterion to determine whether a person should undertake unlimited tax liability.

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 jurisdiction. The government imposes tax on the worldwide income of residents.

The non-tax residents非税收居民: it is an important form of the taxpayer's income tax taxes. Refers to a country that does not conform to the standard tax residents, but has come from the national income taxpayers

Dual resident:双重居民 A person who is identified as a tax resident by two countries in the same tax year, and undertakes unlimited tax liability.

Domicile test:住所标准 It's an important criterion to identify whether an individual is a country's tax resident, it includes family、center of vital interest, etc. For example, if an individual is liable to tax in China if he is domiciled in China.

credit method抵免法：It's one of the methods to avoid international double taxation. Under this method , any foreign taxes paid by a resident taxpayer on foreign -source income serve to reduce domestic taxes payable by the foreign tax amount . The method includes direct credit and indirect credit.

Exemption Method免税法： It's one of the methods to avoid international double taxation. Under this method , a taxpayer's home country will tax it's residences only on their domestic-source income.The method includes Full Exemption and Partial Exemption ,which can totally avoid international double taxation .

Deduction method扣除法： it's one of the methods to deduct international double taxation. It allows residences/citizens to deduct foreign taxes paid in computing their taxation worldwide income. This treats the foreign taxes paid as a current expense. It can relief international double taxation in a way , but can't avoid it at all.

Full exemption:全额免税法 the taxable income deducts income derived from foreign country and already taxed abroad , the tax is computed on its balance with related tax rate.

应税所得额中扣除其来源于国外并已向来源国交了税的那部分所得，其余额按余额运用的税率征税。仅对国内收入征税，国外收入全部免税。

Partial exemption:参与免税法 the taxpayers confirm its tax rate by the sum of their income from both home and abroad but calculate the taxable income exclude the foreign income.

Limitation on credit:税收抵免的最高限额 It is the ceiling of tax credit within which multinational taxpayers may credit its foreign taxes paid. 税收抵免的最高限额，即对跨国纳税人在外国已纳税款进行抵免的限度。Participation Exemption：参与免税 A tax regime under which the dividends received from foreign corporation by resident corporation are exempt from

residence county tax if the resident corporation owns at least some minimum percentage of shares of the foreign corporation.

Tax haven：税收天堂 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.

International tax avoidance: 国际避税 It's the legal utilization of the tax regime to one's own advantage to reduce the amount of tax is payable by means that are within the law.

comparable uncontrolled price 可比非控价格法: This is the traditional method of trading price. This refers to the same transaction under similar transactions between associated enterprises by the use of a controlled the price to adjust between associated enterprises not reasonable transfer pricing methods. Be widely used to commodity, service and other aspects of the transfer pricing adjustment.

是传统交易价格法的方法之一。是指根据相同交易条件下非关联企业之间进行同类交易时所使用的非受控价格来调整关联企业之间不合理的转让定价的方法。被各国广泛应用于对商品、劳务提供等方面的转让定价的调整。

Resale price method再销售价格法: This is the traditional method of trading price. Refers to the associated enterprises transaction will buy a house buy goods for resale to non affiliated enterprise sales price deducts the reasonable profit for the balance after the basis to adjust between associated enterprises transaction not reasonable transfer pricing methods. Mainly used for commodity transaction transfer pricing adjustment.

是传统交易价格法的方法之一。是指以关联企业交易的买房将购进的货物再销售给非关联企业时的销售价格扣除合理利润后的余额为依据来调整关联企业之间交易的不合理转让定价方法。主要用于商品交易转让定价的调整方面。

Cost plus method: 成本加利润法: This is the traditional method of trading price. This refers to the correlation enterprise cost plus a reasonable profit for the amount of as the basis, to adjust the not reasonable transfer pricing methods. Be widely applied to special commodity sales transfer pricing adjustment.

Comparable uncontrolled price: 可比非受控价格法 it's a third party price for identical goods 、service or property under identical conditions . Cost plus Method 成本加成法: It is a adjustment method for transfer pricing. It means that the purchasing cost of the selling party should be based first and then add a certain percentage of profit of the unrelated parties engaging in the same or similar transaction.

Resale price method再销售价格法: the adjusted corporation adjusts the price by the profit deserved to gain while reselling the goods to the unrelated parties.

Comparability analysis: 可比性分析

Comparable profits method: 可比利润法 Goods or services provided to unrelated parties are consistently priced at actual cost plus s fixed