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I. International tax planning
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International tax planning refers to the behavior of transnational taxpayers to reduce or eliminate the tax burden within the scope permitted by the tax law through legal means. International tax planning is the extension and development of domestic tax planning in the international scope, and its behavior not only crosses the tax boundary, but also involves the tax policies of more than two countries. Therefore, international tax planning is more complicated than domestic tax planning.
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International tax planning can be divided into broad sense and narrow sense. Broadly speaking, international tax planning includes both international tax saving planning and international tax avoidance planning. International tax saving planning is not only legal, but also the implementation of taxpayer planning behavior conforms to the legislative intention of the host country; On the surface, international tax avoidance is also legal, but taxpayers achieve the purpose of tax reduction by taking advantage of the loopholes in the tax law, which violates the legislative intention of the host country. In a narrow sense, international tax planning only refers to international tax saving planning. From a practical point of view, many foreign multinational companies have different degrees of tax avoidance in their operations, and they implement a broad international tax planning strategy. Because Chinese multinational enterprises entered the international market late, with small scale and weak competitiveness, in order to maximize profits and improve international competitiveness as soon as possible, in their foreign operations, in addition to narrow international tax planning, some international tax avoidance actions should be properly used.
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"International tax planning" is still a new concept in China, but it has become an important activity in enterprise investment, financial management and business activities internationally. Countries (or regions) in the world vary widely in tax types, tax rates and preferential tax policies, which provides a broad space for multinational enterprises to carry out international tax planning. Economic globalization, trade liberalization, financial market liberalization and the development of e-commerce all provide the possibility for international tax planning. Under the conditions of scientific and technological progress, developed communication and convenient transportation, the flow of funds, technology, talents and information of multinational enterprises is more convenient, which provides conditions for international tax planning. Large multinational companies often hire tax experts to make tax planning for their own companies. For example, Unilever, which is famous for producing daily necessities, has subsidiaries all over the world. Facing the complicated tax system in various countries, the parent company hired 45 senior tax experts to make tax planning. Only "tax saving" has added millions of dollars to the company in one year. String 7
What needs to be pointed out here is that the concept of tax planning is quite flexible and is a relative concept. Due to the different legal standards in different countries, and the laws in different countries are constantly improving, the reasonable tax planning behavior of a multinational taxpayer to reduce the tax burden is sometimes considered as tax avoidance or even tax evasion that should be prohibited in another country or at different times in the same country. At present, all countries in the world regard anti-tax avoidance as a key point of tax work and increase the intensity of anti-tax avoidance. Many countries have formulated special anti-tax avoidance laws and regulations, which undoubtedly brings great difficulties to the international tax planning of multinational enterprises in China. Therefore, multinational enterprises in China should seriously study, carefully analyze and always pay attention to the tax laws and regulations of the host country, find out the shortcomings, seek planning space and avoid possible punishment. String 5
Second, the main methods of international tax planning
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(A) a reasonable choice of investment sites for international tax planning
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1. Make full use of preferential tax policies of various countries and choose countries and regions with low tax burden for investment. String 5
In transnational operation, investors should not only consider the conventional factors such as infrastructure, raw material supply, financial environment, technology and labor supply, but also consider the tax system differences in different regions. The tax burden of different countries and regions varies greatly, and various countries have also stipulated various preferential tax policies, such as accelerated depreciation, tax credit, differential tax rate and loss carry-over. If our multinational investment enterprises can choose countries and regions with more tax incentives to invest, they will certainly benefit for a long time and get a higher return on investment, thus improving their competitiveness in the international market. Usually, after calculating and comparing the tax burden levels of different countries or regions, these enterprises can choose countries or regions with low tax burden and good comprehensive investment environment to invest. At present, there are nearly 1000 special economic zones in the world with various preferential tax policies. The overall tax burden, especially the income tax burden, in these areas is low, which is an investment paradise for multinational investors.
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At the same time, we should also consider whether the investment place has restrictions on the remittance of corporate profits. Because some developing countries attract foreign investment with low income tax or even tax exemption, and at the same time restrict the profit remittance of foreign-funded enterprises, hoping to encourage foreign investors to reinvest. In addition, in transnational investment, investors will also encounter the problem of international double taxation, and avoiding international double taxation is also a factor that multinational investors in China must consider when choosing investment locations. In order to avoid international double taxation, countries have generally signed bilateral comprehensive tax agreements. According to the agreement, residents and non-residents of both contracting parties can enjoy many preferential tax policies, such as tax relief or overseas payment of credit. Therefore, transnational investment should try to choose countries and regions that have signed international tax agreements with their home countries (countries where the parent company is located) to avoid international double taxation. At present, China has signed agreements to avoid double taxation with 63 countries, and more than 1000 bilateral comprehensive tax agreements have been signed among countries in the world. String 4
2. Choose international tax havens for investment as much as possible. At present, there are three main tax systems in the world, namely, the tax system with direct tax as the main body, the tax system with indirect tax as the main body and the low tax system. Countries and regions with low tax systems are generally called "tax havens", and there are three main types: (1) pure international tax havens, that is, countries and regions without personal income tax, corporate income tax, net property tax, inheritance tax and gift tax, such as Bermuda and Bahamas; (2) Only exercise territorial jurisdiction, completely abandon resident jurisdiction, and exempt all countries and regions whose income or general property comes from foreign countries, such as Switzerland, Hong Kong and Panama. (3) Countries and regions that implement normal taxation but stipulate special preferential policies in the tax system to facilitate foreign investors, such as Canada and the Netherlands. Obviously, if investors can choose to invest in these tax havens, they will undoubtedly get the benefits of tax exemption or low tax. Usually, multinational taxpayers can set up base companies in tax havens to achieve the purpose of international tax planning. The typical practice is to establish a headquarters company in a tax haven as a transit sales organization between the parent company and its subsidiaries or subsidiaries. Through the transit of the headquarters company in tax havens, the whole company will reflect its profits in tax-free or low-tax tax havens, thus achieving the purpose of reducing the overall tax burden. String 7
The establishment of international holding companies, international trust companies, international finance companies, holding insurance companies and international investment companies is also one of the important ways for multinational companies to carry out tax planning. Multinational companies can often get the benefits of paying less withholding tax by setting up such companies in contracting countries, low-tax countries or tax havens, or they can easily transfer their profits to tax-free or low-tax places At the same time, because the after-tax income of subsidiaries has not been repatriated, the parent company can get the benefits of deferred tax payment, and it is easier to raise capital and adjust the financial situation of subsidiaries, such as offsetting the losses of subsidiaries in another country with the profits of subsidiaries in one country. By setting up a holding subsidiary in Hong Kong, China Shougang Group has played its outstanding fund-raising function and achieved the goal of reducing tax burden. String 9
(B) Choose favorable enterprise organizations for international tax planning string 4
When multinational investors set up new enterprises, expand investment and set up subsidiaries or branches abroad, they will all involve the choice of enterprise organization methods, and different enterprise organization methods have great differences in tax treatment. (1) As far as branches and subsidiaries are concerned, subsidiaries appearing as independent legal persons abroad can enjoy preferential tax treatment provided by the host country, including tax-free period, while branches sent abroad as part of enterprises cannot enjoy preferential tax treatment. In addition, the losses of subsidiaries cannot be remitted to the domestic head office, but the losses incurred in the course of operation can be remitted to the account of the head office, which reduces the company's income. Therefore, in transnational operations, different organizational forms can be adopted according to the situation of host enterprises in order to reduce the tax burden. For example, in the early days of overseas companies, branches can be adopted because of the greater possibility of losses. When overseas companies turn losses into profits, if they can be transformed into subsidiaries in time, they can get tax benefits that many subsidiaries can't get. (2) As far as the choice of joint stock limited company system and partnership enterprise system is concerned, many countries implement different tax policies for companies and partnerships. Therefore, China's overseas investment enterprises should choose the organization form with lower comprehensive tax burden to set up their own overseas enterprises on the premise of analyzing and comparing the tax base, tax rate structure, preferential tax policies and specific tax policies of investment places.
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(C) the use of transfer pricing in affiliated enterprise transactions for international tax planning fifth string
Transfer pricing means that in international tax affairs, interested parties set prices artificially in transactions, rather than independent parties set prices in a fair market according to the principle of normal transactions. The formulation process of transfer pricing is a very confidential and complicated work. The specific methods of transfer pricing strategy of multinational enterprises are as follows: (1) The cost of subsidiaries is affected by controlling the transaction prices of intermediate products such as parts and semi-finished products. (2) By controlling the selling price or service life of fixed assets of overseas subsidiaries, the cost of subsidiaries will be affected. (3) By providing loans and interest, the cost of subsidiaries will be affected. (4) The cost and profit of subsidiaries will be affected by the royalty level of intangible assets such as patents, know-how, trademarks and manufacturers' names. (5) Technology, management, advertising, consulting and other labor costs are used to affect the costs and profits of overseas companies. (6) Giving overseas companies higher or lower commissions and kickbacks through product sales, or charging subsidiaries higher or lower transportation, loading and unloading and insurance fees by using the transportation system and insurance system controlled by the parent company, thus affecting the costs and profits of overseas companies. String 5
In modern international trade, the internal transactions of multinational companies account for a large proportion. Therefore, taking advantage of their worldwide tax differences, we can realize the transfer of profits by transferring prices, thus reducing the overall tax burden of the company and ensuring the maximization of profits of the whole company. At present, all countries regard transfer pricing for tax avoidance as the primary goal of anti-tax avoidance and formulate transfer pricing tax system, which brings difficulties to multinational enterprises to use transfer pricing for international tax planning. However, in order to attract foreign investment, increase employment and develop domestic economy, the provisions and specific implementation of transfer pricing tax system are often inconsistent, thus creating more flexible space for multinational enterprises to use transfer pricing for tax planning. String 3
(d) Avoid the establishment of permanent institutions for international tax planning.
A permanent establishment refers to a fixed place where an enterprise conducts all or part of its business, including management places, branches, offices, factories and workplaces. At present, it has become the standard for many contracting States to judge whether to tax the profits of non-resident enterprises. For transnational operations, it is more important to avoid setting up permanent institutions and undertaking limited tax obligations in non-resident countries, especially when the tax rate in non-resident countries is higher than that in resident countries. Therefore, multinational enterprises can realize tax exemption in non-resident countries through goods storage, inventory management, goods procurement, advertising, information provision or other auxiliary business activities instead of setting up permanent institutions. For example, many overseas construction companies in South Korea have contracted projects in the Middle East and Latin American countries. These countries stipulate that income earned by non-resident companies within six months can be tax-free. Therefore, these Korean companies often try to complete their contracted projects within six months to avoid paying income tax. For another example, as early as the early 1980s, Japan built many offshore mobile factory workshops, all of which were installed on ships and could be used for mobile operations. These mobile factories have been to Asia, Africa, South America and other places for mobile operations. 198 1 year, a Japanese company went to China to buy peanuts. The company sent one of its offshore workshops to stay in our port for 27 days, and processed the purchased peanuts into peanut pulp, pressed the peanut skins into boards and sold them to China. As a result, 64% of China's income from selling peanuts from Japan was returned to Japan, and the income tax on peanut skin boards obtained by Japanese companies was not paid at all. The reason for this phenomenon is that China and most other countries have stipulated the retention time of non-resident companies, while Japanese companies use this provision to avoid taxes legally.
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With the development of science and technology, e-commerce has increasingly become an important way of international trade. Many characteristics of e-commerce provide convenience for international tax planning. Multinational enterprises in China should also make full use of the characteristics of e-commerce to avoid taxes legally. String 5
(e) International tax planning by selecting favorable accounting treatment methods.
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The diversity of accounting methods provides a guarantee for tax planning. Accounting standards, accounting systems and other accounting laws and regulations, on the one hand, regulate the accounting behavior of enterprises, on the other hand, provide different methods for enterprises to choose from and create opportunities for enterprises to "flow freely" in these frameworks and rules. China's multinational enterprises should be familiar with various accounting systems in the host country and skillfully use various accounting methods to reduce tax burden or delay tax payment. For example, the purpose of delaying tax payment can be achieved by delaying the settlement date of income and expenses for a few days or a few days in advance; In countries where capital gains are levied at or below the income tax rate, overseas enterprises should adjust their financial decisions and accounting policies in time and try their best to convert liquidity gains into capital gains, which will achieve considerable results. Average cost allocation is the best way to offset profits and reduce taxes to the maximum extent. Enterprises can share the expenses incurred in long-term business activities as evenly as possible in each period, so that profits will be even and there will be no phenomenon of excessive taxation at a certain stage. In the case of rising prices, the last-in-first-out method can effectively reduce the tax burden; When depreciating fixed assets, the accelerated depreciation method can be used to recover the investment in fixed assets as soon as possible, reduce the profits in the same period and postpone the payment of income tax.
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Three. Matters needing attention in international tax planning (5)
Facing the changeable world economic climate and complex international tax environment, multinational taxpayers carry out international tax planning, the fundamental purpose of which is to minimize the tax burden on a global scale. Therefore, multinational enterprises in China must arrange their business activities, plan their tax revenue and carry out global tax planning from a global perspective. String 1
1. Need to know more about the tax system and related information of each country. At present, there are great differences in tax systems among countries in the world, and there are many kinds of taxes, tax rates and tax calculation methods, and the tax relationship is quite complicated. In addition, the business forms, income types, business contents, tax payment places, politics, military affairs, science and technology, culture and folk customs of various countries all affect the business activities of enterprises, and then affect the financial and tax arrangements of enterprises.
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2. There must be multiple choices. Multinational enterprises should comprehensively analyze the situation, evaluate the situation, design as many alternatives as possible from all angles, and choose the most favorable one.
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3. Have a global concept. Multinational enterprises should look at the problem from a global macro perspective. Pursuing the minimum tax burden does not mean the minimum overall tax burden, and pursuing the minimum tax burden does not mean the maximum income. For example, in order to reduce the burden of withholding tax, we try to use the tax treaty between this country and other countries, but the income tax in this country is very heavy. Another example is that the tax situation in a country is favorable, but the economic environment and geographical environment there are very bad, so it will cost a lot to use it.
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4. Have a long-term view. Tax planning should be forward-looking, and we should not kill the goose to get the egg, and ignore the long-term interests in pursuit of immediate interests. Multinational enterprises in China should have a long-term overall tax plan and business plan.
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