Discussion on profit transfer and tax avoidance issues of multinational companies in China

1. Case background

In the early days of reform and opening up, there was indeed some resistance in the transformation of the planned economy. Therefore, the macro policy proposed that "opening up can introduce technology and management", which is also for the purpose of Break resistance. As a result, foreign-funded enterprises have obtained preferential policies in taxation, land and other aspects. However, many foreign investors use this as a way to obtain excess returns.

A research report on foreign investment completed by the National Bureau of Statistics’ “Research on Foreign Capital Utilization and Foreign-Invested Enterprises” report said that about 2/2 of the foreign-invested enterprises that suffered losses 3 refers to abnormal losses, and tax losses incurred through tax avoidance through transfer pricing amount to 30 billion yuan every year. Foreign-funded enterprises have relied on super-national treatment and tax avoidance methods to enable them to develop and occupy the domestic market at lower prices, which has had a huge crowding-out effect on domestic-funded enterprises.

Studying the behavior of multinational companies in China can also provide experience for Chinese companies. Groupization and globalization are trends in enterprise development

Chinese enterprises will encounter quite a lot of problems in this process. Learn from excellent multinational companies and strengthen parent and subsidiary companies

Management and control capabilities are the only way for Chinese enterprises to succeed.

2. Profit transfer of multinational corporations - successful horizontal control

In the process of globalization of multinational corporations, under the guidance of the overall framework of parent and subsidiary management and control, and out of the overall strategic considerations of the group

For its many subsidiaries in different business fields and regions, the parent company will establish effective horizontal management and control based on changes in the operating environment. With the assistance of financial control, the implementation of the group's overall strategy will be more rapid and effective.

1. The motivation for the profit transfer of multinational companies - transferring the profits belonging to the Chinese party into its group

There are many ways for multinational companies to establish subsidiaries in China, which can generally be divided into Sino-foreign joint ventures and foreign investors

There are two types of sole proprietorships. In a Sino-foreign joint venture, the Chinese partner is not included in the group's interests and is not part of the group. So the mother-child control system of the multinational company will naturally involve how to make its Chinese subsidiary

The company can create more profits for the group. When the profits that the joint venture can create are fixed, both parties in the joint venture

share the benefits and risks equally. , the horizontal control generally established by multinational companies will require finding ways to transfer the overall profits of the joint venture to the parent company or wholly-owned subsidiaries as much as possible to maximize the interests of the group

Change.

The strategy we just mentioned for multinational companies to control the profits of their subsidiaries in order to maximize group profits is actually a horizontal strategy in the management and control of parent and subsidiary companies. Horizontal strategy (Horizonta1Strategy) is the goal and strategy of coordinating related business units, including coordinating existing business units and choosing to enter new industries based on their association with existing units. Horizontal strategy is the coordination and unification of goals and policies between the group company headquarters and subordinate business units.

So what kind of method can make such horizontal control effective?

2. Ways for multinational corporations to transfer profits

To implement effective horizontal control, multinational corporations need to think comprehensively about the various opportunities that are beneficial to them

and how to use them. value. Horizontal management and control alone is not enough to have a strategy, but also requires specific and operable strategies.

The strategies used by multinational companies in China to implement the horizontal control strategy of profit transfer are nothing more than the following two:

(1) Using brand advantages to suppress partners

Chinese companies in joint ventures They often do not have their own brands, but expect to use well-known brands provided by multinational companies to quickly increase sales and seize the market. In joint ventures, this approach can indeed quickly increase sales,

but it also establishes China's dependence on foreign investors. Without the well-known brands provided by multinational companies, the Chinese side is almost unable

Survive.

Based on this, multinational companies have taken the initiative in the operation of joint ventures, and the Chinese side has to look at their faces.

Simply controlling partners will not bring direct benefits to multinational companies, nor will it have a direct impact on the implementation of their horizontal strategies. Multinational companies must further master the Only the financial control rights of the joint venture can realize the transfer of profits. So how did financial control fall into the hands of multinational corporations?

(2) Use technological advantages to control purchasing and sales channels

In many joint ventures, the Chinese side has more controlling rights, so it stands to reason that the Chinese side should hold the leadership

Enterprises, but in actual work, because foreign capital provides "advanced management experience" and "advanced production technology

, they have mastered the decision-making direction of most practical issues. In particular, foreign parties control the procurement of raw materials and parts in actual operations by virtue of their technical control.

In addition, as a condition for the establishment of a joint venture, the multinational company actually controls most of the group's sales rights.

When it comes to purchases and sales, finance must be involved. The result of purchasing is cash outflow, and the result of sales is cash flow

Inflow. This provides the possibility for multinational companies to transfer profits.

The profit transfer of foreign-funded enterprises occurs in the procurement process. The premise is that the foreign party adheres to the "original supply principle." Technical control, and the purchasing power of raw materials and parts. In recent years, Sino-foreign joint ventures and wholly foreign-owned enterprises generally adhere to the "original supply principle" when purchasing raw materials and parts, and exclude Chinese-funded enterprises.

Take automobile manufacturers as an example. Foreign investors deliberately established wholly-owned parts companies in their own countries and established Sino-foreign joint venture vehicle companies in China.

A portion of the money earned by a Sino-foreign joint venture company must be shared with the Chinese side, but the profits earned by a wholly-owned parts and components company established by a foreign investor in its home country belong entirely to the foreign investor. Chinese parts and components companies that supply supporting products to Sino-foreign joint venture OEMs and vehicle companies must pass the "certification" of the foreign headquarters. In this way, "profit transfer" is achieved.

"Certification" is just a means, transferring profits is the essence.

Purchasing raw materials and parts from the parent company at high prices is another magic weapon for foreign-funded companies to "substitue others". A

Japanese-owned auto parts company purchases raw materials from its parent company, and its purchase price is dozens of

times higher than the same raw materials in China. Authoritative sources told reporters that foreign parties purchase raw materials and parts from the parent company at high prices and then sell the products to the parent company at low prices, thus transferring profits to the parent company, increasing the costs of Sino-foreign joint ventures and reducing costs. Profits from Sino-foreign joint ventures

.

From group strategy to horizontal strategy to specific operational strategies, multinational companies have demonstrated the effectiveness of horizontal control

. The development strategies of their subsidiaries in China have long been Incorporated into the group's overall strategy, by the time China became aware of this issue, everything seemed to be unshakable.

3. Analysis of tax avoidance of multinational companies - strong financial control

In the parent-subsidiary management and control system, the most concerned thing is undoubtedly the financial control, because the financial data

The indicator is the parent-subsidiary control system An important indicator of success is also the core of parent-subsidiary management and control.

The basis of the parent company’s centralized management is the financial control of the following rights:

(1) The parent company’s final decision-making power on the investment and income distribution of subsidiaries;

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(2) The parent company has the right to regulate the accounting of its subsidiaries, and the subsidiaries implement the unified accounting system and accounting policies of the parent company

;

(3) , the parent company has the right to regulate the finance of its subsidiaries.

1. The motivation for tax avoidance by multinational companies - tax loopholes caused by super-national treatment

Before making reasonable financial controls, multinational companies will first study the national conditions of the country where they are located, and based on specific circumstances

Make an analysis and build an appropriate financial management model based on the company's development strategy.

The "Income Tax Law of the People's Republic of China and Foreign-Invested Enterprises and Foreign Enterprises" stipulates that for productive foreign-invested

enterprises with an operating period of more than 10 years, from Starting from the year when profits begin, corporate income tax will be exempted in the first and second years, and corporate income tax will be halved from the third to fifth years.

For these companies, there are two ways to avoid paying taxes: one is to make a loss, but only make profits for two years.

Multinational companies may not adopt the above-mentioned business methods. Multinational companies have specialized lawyers to study the policies of various countries and the loopholes in the policies, combined with various cost analyses, to make extraordinary decisions. Legal and reasonable financial control, in conjunction with

the execution of horizontal strategies.

2. How do multinational companies avoid taxes?

In the process of studying the tax avoidance methods of multinational companies in China, we found that their strong financial control is very good

It cooperates with the group's overall strategy and horizontal strategy. Only with its globally integrated financial management and control system can the tax avoidance plan they formulated

be implemented smoothly. So, what specific methods do they use to avoid taxes?

(1) Price transfer

Judging from the problems discovered in practice, the main means for enterprises to avoid taxes are as follows: First, in cross-border transactions

In terms of trade, profits are transferred to enterprises that are in the tax reduction and exemption period through high export declaration and low import declaration, or foreign-invested enterprises that have passed the tax reduction and exemption period are placed in the tax exemption period through low export declaration and high import declaration. A state of loss or small profit. As for the former, what enterprises avoid is overseas taxes, which is not the focus of the Chinese tax authorities. However, it is often an important channel for money laundering or hot money to flow into the country. As far as the latter is concerned, it damages China's tax base; under the general trend of economic globalization, this method widely used by multinational enterprises should become China's customs and taxation< /p>

The focus of the department.

For example, for a food company in Hebei, the domestic sales price of its main products in 2005 was 71 yuan/box, but the export price

was only 36 yuan/box; a pharmaceutical company in Shandong passed The overseas parent company directly sets the unit price of export products at 40 yuan lower than the average price of similar domestic products, thereby reducing sales revenue and transferring actual profits in disguise. Outbound. Under the current situation, the above-mentioned behaviors of enterprises will not only become a channel for capital flight and cause the loss of national tax revenue, but also become one of the excuses for foreign countries to accuse China of low-price dumping.

Secondly, in terms of service trade, foreign-invested enterprises can achieve the goal of transferring profits to domestic or overseas enterprises through the sharing of management fees and the transfer payment of consulting fees and technology patent fees

Purpose. For example, Hebei Yi Ceramics Co., Ltd. signed an agreement with its Hong Kong parent company, stipulating that 32% of its sales revenue should be paid overseas for consulting fees every year. In 2005 alone, it paid 804 Ten thousand US dollars, equivalent to three times its profit for the year. Shenzhen No.1 Petrochemical Co., Ltd.

paid a total of 160 million yuan in technology transfer fees, service fees and trademark license fees to overseas affiliated enterprises from 2003 to 2005, accounting for 10% of the total management expenses. 56.3%, accounting for 63% of the uncovered loss of 260 million yuan. The proportion of its service trade expenditure is indeed staggeringly high.

Multinational companies in China obviously use price transfer as the main means to achieve profit transfer and tax avoidance. Among the characteristics of financial management and control of parent and subsidiary companies, we have noticed that in terms of financial management methods, enterprise groups are highly comprehensive

budgeted, and the budget structure and operation process are relatively complex. . Multinational companies are obviously well aware of this. Their actual operation methods are very complex. They often move abroad several times, and their internal financial accounting has very advanced software systems.

Some Domestic tax workers do not know how to operate the software system at all, making supervision extremely difficult.

(2) Thin capitalization - a channel for false losses

In terms of capital project transactions, companies can not only transfer equity or register shell companies, but also transfer

Change the registration place of the parent company to an offshore financial center and other tax-preferential areas, and transfer profits to the parent company through related transactions

; you can also increase shareholder loans and weaken capital as much as possible Remit debt interest to many places,

reducing pre-tax profits. The International Organization for Economic Cooperation and Development's identification standard for thin capitalization is that the ratio of corporate equity to debt capital is less than 1:1, and the U.S. tax system's identification standard for this is 1:1.5. According to China's current tax law, the interest payable on foreign debt borrowed by an enterprise can be deducted from the enterprise's pre-tax income.

In order to achieve the purpose of tax avoidance, some foreign-invested enterprises borrow as much shareholder loans as possible to reduce the ratio of equity capital to debt capital to well below 1:1. According to international standards, book losses are caused through thin capitalization, while actual profits are remitted to the overseas parent company in the form of debt interest.

In addition to the weakening of capital, there are now many foreign-invested enterprises that remit actual earnings to enterprises registered in

tax-avoiding offshore financial centers through price transfers, while domestic foreign-invested enterprises It itself has been in a state of loss for a long time.

In the financial management and control system of the parent and subsidiary companies, fund management (Treasury) is an important content. In order to obtain more funds for the development of the enterprise, borrowing from the bank is almost the only way for every enterprise, but the interest rate of the bank loan makes the enterprise financial costs rose sharply. Even joint-stock companies can raise large amounts of funds through the public market, but facing the capital market, there is still a problem of return on investment.

Although the interest generated on domestic borrowings can also be deducted from the company's pre-tax income, it is better to pay the interest to the parent company at a higher interest rate than to pay the interest

to the domestic bank. The company pays to achieve tax avoidance and profit transfer at the same time

.

(3) New foreign companies are a vehicle for old foreign companies to evade taxes

Overseas investors will establish new foreign-invested enterprises on a rolling basis according to the two-year exemption and three-year halving period, and pass the tax exemption through overseas taxation.

Related transactions between new and old foreign companies in China or between domestic and foreign companies, causing old foreign companies to lose money and new foreign companies to make profits, is another means of evading taxes.

For example, a well-known Taiwan-funded food group has a tendency to continuously add foreign-invested enterprises during tax exemption periods.

This series of Taiwan-funded enterprises made particularly large profits in the first two years after their establishment; in the three years after the tax was halved, profits dropped significantly

After paying the tax in full, the profits dropped significantly. Immediately fall into the critical point of profit and loss or a state of loss. The method of adjusting the profits of new and old foreign-invested enterprises also includes the related party transactions mentioned above. For example, Qingdao Korean-owned Shoe Manufacturing Co., Ltd. manipulates import and export prices through overseas parent companies and allows old foreign companies to bear the additional costs of new foreign companies, allowing old foreign companies to grow year-round.

The total losses and profit margins of new foreign companies are extremely high. The group's return on net assets during the preferential tax period was as high as 757%, in sharp contrast to the continued losses of old foreign companies with the same business scope.

We have mentioned before that multinational companies have specialized legal teams to study the laws of the countries where each subsidiary is located.

China’s current institutional flaws in introducing foreign investment have become a problem for multinational companies. Utilization link. For many local officials, the introduction of foreign capital is equivalent to political achievements, so they do not pay attention to the benefits that foreign capital can bring when introducing foreign capital.

On the other hand, we have seen another manifestation of horizontal control of foreign investment in China. For groups,

transferring profits from one country to another, and Transferring taxes abroad is not as convenient and cheap as transferring taxes within a country

, and it also ensures the capital needs for reinvestment in the country where the subsidiary is located. Horizontal control

The content is very rich.

4. References for parent-subsidiary management and control in the process of groupization and globalization of Chinese enterprises

Strategy formulation is an extension of strategy formulation. We believe that a complete set of strategies and strategy formulation of multinational companies

and The reason why the implementation can be so thorough and smooth is inseparable from its complete parent-subsidiary management and control system.

Multi-national companies do not just transfer profits and avoid taxes in China in response to China's special circumstances. In every corner of the world, as long as they have interests, as long as they are in their group business Within the scope, their parent and subsidiary management and control systems will exert an influence. Their excellent horizontal management and financial control are like the merger of two swords, capable of breaking through everything.

For Chinese enterprises, groupization and globalization are inevitable trends. Without such ambition, we will inevitably fall behind other companies. If we want to become a group and globalize, we must strengthen the control of parent and subsidiary companies.

How to strengthen the control of parent and subsidiary companies? Chinese companies are not without experience to learn from. Many cases of multinational companies in China have become living textbooks. Regardless of whether these two practices of profit shifting and tax avoidance by multinational companies in China are correct, at least in terms of horizontal strategy and financial control, there is much that Chinese companies can learn from.

1. The group's horizontal strategy

(1) How to understand horizontal strategy

Horizontal strategy is to coordinate the goals and strategies of related business units, including coordinating existing business units and based on and

Affiliates of existing units choose to enter new industries. Horizontal strategies can and should exist at the group, department, company, etc. levels. However, no matter how carefully companies develop strategies for individual business units, they have only the most informal horizontal strategies. However, visible connections remain a major potential source of competitive advantage. A clear

horizontal strategy should be at the core of group, divisional and corporate strategies.

Companies without a clear horizontal strategy will find it difficult to withstand the ever-present strong pressure to maximize the performance of individual business units to the detriment of the company's performance, especially those with a tradition of decentralized decision-making. enterprise.

Multinational companies do not limit their advantages to a single department or a single geographical area, but

measure the scientific nature of strategy from the perspective of maximizing group interests.

Horizontal strategy is the concept of group, company and department strategy based on competitive advantages. Horizontal strategy is not

business portfolio management, it is the essence of corporate strategy.

Horizontal strategy is the coordination and unification of goals and policies between the group company headquarters and subordinate business units. In many

group companies, there are long-term strategically important interconnections. The strategic benefits brought about by identifying these relationships and obtaining them

make group companies surpass multiple companies. The difference lies in the consortium.

Horizontal strategy means that the group company headquarters achieves synergy between subordinate business units through related management.

In the case of conglomeration, it can create synergies for subordinate enterprises that cannot be achieved as a single enterprise. To enhance the group's competitive advantage

the company's management and control level.

In the process of groupization, Chinese enterprises must gradually become accustomed to considering the overall situation and not be overly concerned about the temporary success or failure in a certain

field or region. Maximize the success and failure through reasonable horizontal strategies. Focusing on the interests of the group is the key. So

how should we develop a horizontal strategy?

(2) Formulation of horizontal strategies

Ⅰ. Identify relationships. First, we must scientifically identify all actual or potential tangible horizontal relationships between the various business units of a company. In practice, the first step is to examine the value chain of each business unit to see if there are actual and possible opportunities to exploit various value activities. At the beginning, all horizontal relationships that seem to exist should be identified; then, through further analysis, those illusory or meaningless horizontal relationships should be eliminated. When studying horizontal relationships, it is necessary to identify specific characteristics of activities that are likely to provide value as the basis for practical use.

Ⅱ. Evaluate the relationship. If the benefits of transferring expertise are greater than the cost of transferring expertise, intangible mutual

relationships lead to competitive advantages. Transfer of expertise is done if there are many similarities between the value activities, if the value activities are important to the competitive advantage of the industry concerned, and if the transfer of the company's expertise can materially enhance the competitive advantage

It is a useful activity.

Ⅲ. Develop a horizontal strategy. A company cannot successfully develop interconnections without a horizontal organizational mechanism that encourages coordination and transfer of skills between operating units.

Measures such as identifying appropriate operating units, organizing them into corresponding groups and departments, and establishing reward systems to encourage managers of operating units to do their best work.

These are critical to the success of the business.

What is described above is the general process of formulating horizontal strategies. When formulating horizontal strategies, group companies must understand

their own parent-subsidiary management and control systems and cannot leave the parent-subsidiary management and control framework. .

2. Financial control of the group

From our previous analysis, we can see that the implementation of the horizontal strategy of multinational companies requires the cooperation of the group's financial control

. Chinese companies are no strangers to financial control. Even small companies have finances and need financial management.

However, different enterprise sizes have different financial management requirements. So what are the requirements for financial management

of a group company? How to implement financial control?

(1) Requirements for financial control

The most ideal financial control system for the parent and subsidiary companies is one that cannot be controlled too tightly, but cannot be too liberal, and is effective

Effective management and control system.

The key part of group financial management is to combine strategy, business plan and budget management, which is also

the most important means of strategy execution and implementation.

A complete financial analysis and reporting system is an effective means to implement management control, and is an important information basis to support the group's senior leaders in making decisions.

Reduce financial management expenses, which is an important indicator to measure a company's management level and operating mechanism.

Observing the financial management and control systems of multinational companies in China, we can find that their financial management and control systems focus

on the efficiency and cost of financial control and the effectiveness of matching strategies.

(2) How to implement financial control

Ⅰ. Sound financial system

If the accounting system is not sound, it will create opportunities for operators to violate laws and disciplines. . The accounting system is prevention in advance

Accounting is in-process and real-time supervision, while auditing is post-event supervision. In a certain period of time, the confusion of corporate financial management systems and low financial control capabilities are often the main reasons for the financial failure of an enterprise.

Ⅱ. Financial budget control

By preparing financial budgets, group companies can fully grasp the production and operation processes of their affiliated enterprises. Once the financial budget is released, it becomes the company's business goal and generally does not require adjustments during implementation. If special circumstances require adjustment

it must be reported to the board of directors for approval in accordance with procedures. Through the dynamic management of financial budgets, the group headquarters can effectively control the main financial activities of subsidiaries and branches.

Ⅲ. Effective control of cash

First of all, off-book cash circulation must be eliminated, and all cash must enter the bank account system. The second is to ensure that

all cash can be managed centrally. Enterprises can set up a financial settlement center to uniformly manage the funds within the group and understand the direction of the subsidiary's fund operations in a timely manner. The third is to do a good job in budget settlement. Daily expenses should be budgeted in advance and settled afterwards. Fourth, expenditure items exceeding a certain amount must be approved by the board of directors. The fifth is to raise funds in a unified manner, thereby directly controlling the investment plan of the operation, and directly controlling major decisions such as fund allocation and profit distribution, and centrally managing them.

Ⅳ. Control of corporate assets and liabilities

Assets and liabilities are important indicators for measuring the quality of corporate operations. The investor hands over the management rights to the operator, which actually separates the two rights. This requires investors to strictly control the assets controlled by operators. When purchasing, they must be approved and archived. When scrapped, files must be recorded, and a dedicated person should be responsible for checking accounts and materials.

Since excessive debt can lead to the destruction of capital, investors must constantly control the scale of debt

through rational means. Investors' liabilities generally have a relationship with banks, so handling the creditor-debt relationship with banks is the main means to control corporate assets and liabilities.

Ⅴ. Control of financial risk

Financial risk refers to the uncertainty that debt brings to corporate income. Corporate debt operations will have an impact on the profitability of the company's own funds. Since the debt has to pay interest, the debtor has priority over the company's assets. If the company does not operate well, , or there are other unfavorable factors, the company will become insolvent and the risk of bankruptcy will increase.

But on the other hand, effective use of debt can greatly increase a company's profits. When a company operates well and has high profits, high debt will lead to rapid growth of the company. Reasonable control and utilization of financial risks is another factor for the success of an enterprise.

Ⅵ. Strengthen the internal audit supervision system

Internal audit supervision is an extremely important part of the entire financial control system. In order to ensure the overall goals of the group company

To achieve this smoothly, the group company should establish an internal audit system and set up an audit department. This will, on the one hand, institutionalize, standardize and regularize the internal audit work; on the other hand, it will be conducive to carrying out regular and irregular audit work, such as financial revenue and expenditure audit, economic audit, etc. Responsibility audit, financial decision-making audit, infrastructure audit, etc. to ensure that the group company obtains accurate financial information in a timely manner and improve the scientific nature of business decision-making.

Similarly, we also require the financial control of the group company to cooperate with the group strategy, especially in line with the control framework of the parent and subsidiary companies.

Otherwise, the financial control will be like a castle in the air, with nothing but gorgeous features. Appearance, but unable to make

substantial contributions to the group. In this regard, multinational companies have set a good example for Chinese companies.

1. How does the Chinese government strengthen its supervision of multinational companies

The profit shifting and tax avoidance of multinational companies in China do reflect the horizontal strategic and financial management capabilities of these multinational companies

But we It cannot be denied that China still has room for improvement in certain systems for introducing foreign investment.

1. Gradually cancel the "super-national treatment" of multinational companies

Since the reform and opening up, China's foreign investment policy has been "accepting" and "releasing" foreign investment, and the proportion of joint ventures and exports

All have certain requirements. In terms of taxation, there are also preferential tax policies for foreign investment. The essence of utilizing foreign capital is to promote

domestic economic development, and the introduction of foreign capital is linked to the assessment standards of local government officials. On the one hand, it can promote the introduction of local foreign capital, but On the other hand, the introduction of excessive foreign investment will have a greater impact on the local economy.

The "Eleventh Five-Year Plan for Business Development" issued by the Ministry of Commerce proposes to gradually cancel the "super-national treatment" for foreign investment, so that domestic-funded enterprises and foreign-funded enterprises will start on the same starting line Let the world compete on an equal footing and let the world see that China's opening up to the outside world is in line with international standards.

Reasonably reconstructing the preferential tax policies in my country’s foreign-related tax laws is also an urgent task. The deletion and update of various preferential policies

will make it impossible for foreign-invested enterprises to use preferential policies for international tax avoidance.

2. Strengthen international anti-tax avoidance work

Ⅰ. Standardize the transfer pricing tax system and establish an international market price information system

In practice, the following four aspects should be done: First, set up and implement A specialized agency for the transfer pricing tax system to formulate specific implementation plans and systems.

Second, tax investigations and accounting adjustments should be carried out simultaneously to effectively protect the Chinese interests of joint ventures. Third, strictly implement the accounting audit system of Chinese certified public accountants for foreign-related enterprises, so that part of the transfer pricing can be adjusted during the audit stage. Fourth, the tax department should establish a sound and systematic collection system of international market price data to provide a basis for adjusting and confirming transfer pricing.

Ⅱ. Improve tax legislation and expand the anti-tax avoidance power of the tax department

Separate anti-tax avoidance provisions should be formulated in the tax law, the main contents of which should include: clarifying the concept of affiliated enterprises and providing

Provide legal basis for international anti-tax avoidance; improve regulations to prevent transfer pricing tax avoidance. When formulating regulations, you can refer to the internationally accepted arm's length principles, the principle of proof-shifting and tax compromise.

principles, etc., make ex-post adjustments to cross-border pricing in accordance with the normal transaction principle; clarify that tax authorities have the right to make adjustments and penalties when they have sufficient information and conclusive data. Decision; formulate penalty rules for taxpayers who fail to cooperate with tax authorities; clarify the cooperation functions of relevant departments in international anti-tax avoidance, formulate penalty provisions for non-cooperation and violation of regulations by relevant departments; revise and supplement as soon as possible There are tax provisions applicable to e-commerce, clarifying the time when tax obligations occur, tax deadlines, tax payment locations, tax rates, and tax information declaration and storage systems for online commerce.

Ⅲ. Adapt to the new situation and take corresponding measures to prevent international tax avoidance in e-commerce

First of all, a tax collection and management system that meets the requirements of e-commerce should be established and the tax authorities’ own network construction should be strengthened.

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Realize connections with banks, customs, and online business users on the international Internet as early as possible to achieve true online monitoring and inspection

and strengthen online cooperation with tax authorities in various countries. Second, implement the e-commerce tax registration system.

After completing the online transaction procedures, taxpayers must go to the tax authorities to apply for e-commerce tax registration. Third, we should start from the payment system to solve the problem of e-commerce tax collection and management and prevent the loss of tax sources. The payment system established and used by e-commerce can be considered as a means of auditing, tracking and monitoring transaction behavior. Fourth, organize the research and development of intelligent taxation software to form an online automatic taxation system that can automatically identify taxable goods or services traded through the Internet and determine the applicable According to the tax types, tax items and tax rates, the tax amount is automatically calculated and the tax is automatically transferred to the account designated by the tax authority.

Fifth, we must strengthen international tax cooperation and improve international tax agreements.