国际税收课后习题答案.docx

Chapter11.what is International Tax?What does it mainly address(探讨)?International Tax is a science focusing on a serious tax issues resulting from different and conflicting tax rules made by particular countries ,jurisdictions and resolutions(决议).International tax in a board sence covers not only income but also turnover taxes,etc.2.Talk about differences between China and USA on taxation system 1)The USA is a country with income taxes as a major tax while in China we have turn over taxes as our important taxes.2)The federal government,state government and local government of the USA have pretty rights to collect taxes,while the rights to collect taxes are mostly controlled in central government.3)The USA use comprehensive income tax system and deduct fees refers to different situation.China use itemized income tax system.4)In the respect of estate tax, real estate tax is the mainly object to be taxed .3.On differences among Macau,China Continent and HongKong for the purpose of tax features according to table 11)The corporate income tax rates in China Continent is the highest in these three ,to 25%.The tax base of China Continent Is worldwide while the others are territorial.2)In China Continent we have taxes for interest,royalties,technical fees,management fees (all of them are 10% for non-resident,20%for resident ),while the others dont have them.3)China Continent have value-added tax ,while the others dont have them.4.On differences among UK,China Continent and Spain for the purpose of Corporate income tax according to table 21)Spain has the highest corporate tax rate to 32.5%.2)UK doesnt tax for many income which China Continent or Spain will tax such as Capital gains ,branch profits,dividends, technical fees and management fees.5.On differences among China Continent and foreign jurisdictions for the purpose of withholding taxes according to table 31)For branch profits, interest ,technical fees and management fees most jurisdictions dont collect tax except Ireland(collect for interest) and China Continent.2)Except Switzerland federal tax rates of dividends and interest are 35% and higher than China Continent ,other jurisdictions withholding tax rates are mostly lower or equal to China Continent.Chapter2International Income Taxation1.How does a country generally design its income taxation system?(book page50)1)territorial(领土模式）：tax only income earned within their borders.eg.HongKong.2)Residency(属人模式）:tax on the worldwide income of residents, and impose tax on the income of nonresidents from certain sources within the country. eg.the USA.3)Exclusion(例外）:specific inclusion or exclusion of certain amounts,classes,or items of income in/from the base of taxation.4)Hybrid(混合模式):some governments have chosen for all or only certain classes of taxpayers, to adopt systems that are a combination of territorial, residency, or exclusionary.2.Why is it important to make clear source of income?To make clear source of income is important because it decidides that whether a individual or corporation should pay tax in a country and what credits can it enjoy.3.Term explanation:Thin Capitalization;Foreign tax Credit;Withholding tax; International tax treaty; Deferral system; International transfer pricing Thin Capitalization:Thin capitalization is a method that taxpayers borrow too much money from oversea related party and pay much interest, so that they can enjoy much deduction before tax.By this way,they transfer profits from high tax burden countries to low tax burden countries or jurisdictions.Foreign tax Credit（外国税收抵免）：If you paid or accrued foreign taxes to a foreign country on foreign source income and are subject to resident country tax on the same income, you may be able to take a credit for those taxes.Taken as a credit, foreign income taxes reduce your own country tax liability. Withholding tax:Withholding tax is tax withheld by the country when a corporation making a payment to its resident country , in which the full amount owed to that corporation is reduced by the tax withheld.International tax treaty:International tax treaty is a treaty a country (or jurisdiction) signed with other countries (or jurisdiction) for affairs about taxation.Deferral system：Deferral system is a tax incentive (激励措施)to encourage domestic tax residence to make investment broad.But it may cause international tax avoidance.(缺点：可能造成国际避税)International transfer pricing:International transfer pricing is a very important way for multinational company to avoid international tax.Transfer pricing refers to a kind of non-market pricing action taken by related corporations to shift profits form high tax rate countries or jurisdictions to low tax rete regions.Chapter3Tax Residence1.What is the main difference between a tax resident and a non-tax resident for tax liability purpose?In general, a tax resident bears infinite tax liability ,should pay tax for all of its income.A non-tax resident bears limited tax liability, should pay tax for income sourced from the country.2.Can you name some tests in determining whether a person is a resident?for corporation:place-of-incorporation test,place-of-management test,residence of the shareholders testfor individiual:a fact-and-circumstances test ;abode test; number of day test(in China:15year temporary resident,>5year - long-term resident)3.Take an example to prove how different countries apply differing tests to judge a persons residence?For example ,China for individual:domicile test,number of days(a full year);for corporation:place-of-incorporation test or place-of-management testireland for individual:number of days test(183 days),domicile testfor corporation:place-of-incorporation test or place-of-management test4.Term explanation:Tax residence;dual resident;domicile test;Tax residence:If an individual or a corporation is a tax residence ,it bears infinite tax liabilitis to its own country.Domicile is, in common law jurisdictions. dual resident:dual resident means an individual or a corporation is resident taxpayer in two countries at the same time.It often occurs when two use different standard for tax residence. domicile test:If an individual or a corporation has its domicile in a country ,it is the countrys tax residence.It is a common tax jurisdiciton.Chapter4Income Source Jurisdiction and Rules1.What is source jurisdiction?Source jurisdiction is one important form of income tax jurisdiction.It is the most important tax jurisdiction.(收入来源地管辖权是一种重要的，并且是最重要的税收管辖权)All country and jurisdiction adopt source jurisdiction(所有的国家和地区都使用来源地管辖权)So called source jurisdiction refers to that as long as an tiem of income is sourced within the territory, the government of the territory has rights to lavy income tax on it .(一笔所得只要来源于本国，就可以对其征税)2.How to determine the source of employment and personal services income?If the income derived from personal services performed by an employee, it is source of employment.If the income is performed by an independent contractor or a professional ,it is source of personal service income.3.How to determine the source location of business Income?What is PE?If the income is attributable to a PE(permanent establishment) in the country(ues 1.attribution rule 归属原则2.attraction rule引力规则), it is the countrys source income.PE: permanent establishment，based on substance or people.(场所：辅助性、准备性不算；人：必须是非独立代理人，经常为公司签订合同的等)4.How to determine the source of investment income?Dividend and interest income.If the income is derived from ownership of equity ,it is the source of investment income.5.How about US source rules?6.What are Chinas source rules?An RE(resident enterprise)must pay enterprise income tax to the Chinese government on all its income,regardless of whether such income is generated within or outside of China.The defult tax rate for an RE ,prior to any special tax treatment, is 25 percent.An NRE(nonresident enterprise) that has any Operational Establishment in China is required to pay enterprise income tax only on its income sourced from China.The tax rate is 10 percent.Chapter 5International Double Taxation and Relief 1.What is International double taxation?International double taxation is that the same item of asset is taxed twice or more than twice in a tax year.2.What is the main difference between legal International double taxation and economic International double taxation?Legal International double taxation is for the same taxpayers ,who are often branch companys, using direct credits.Economic International double taxation is for different taxpayers,who are often subside companys,using indirect credits.3.Take an example to prove International double taxation arising from the same tax jurisdiction and relief.4.What approaches are used to solve International double taxation resulting from residence-source conflicts?Unilateral,bilateral and multilateral approaches.Deduction method,exemption method,credit method and so on.5.What is the main difference between deduction method and credit method?Deduction:reduce all kinds of fees from taxable income.Credit:reduce credit from tax due.6.Which specific relief methods does international community agree to?The OECD and UN models only authorize the credit and exemption method,not the deduction method.7.Termexplanation:fullexemption;partialexemption;limitation on credit;full exemption:only levy tax on income from resident companys own country.partial exemption:give resident company a part of tax exemption for overseas income.limitation on credit:the tax rate of resident companys own country multiply by the income in the country.If the taxpayer paied a amount of tax less than the limitation,it should pay tax in arrears.Chapter 6International Tax Avoidance and Tax Haven 1.What is tax haven?Tax haven is a country or jurisdiction which has low tax rate or no tax so that people choose to live or register company there to avoid the high tax burden in their own country or jurisdiction.Another definition:A tax haven is a country or territory where taxes are lavied at a low rate or not at all.(in the book)2.How many types of tax havens are there in the world?There.1）Nil-Tax Havens(零税率):do not have any of the three main direct taxes:No income tax or corporation tax;No capital gains tax,and No inheritance tax.2）Foreign Source Exempt Havens(外国来源豁免)：They only tax you on lacally derived income.3）Low-Tax Havens(低税率):Have special concessions or double tax treaties.3.Name some non-tax features of a tax haven?Generally,a tax haven have these features:1)Small territory 2)Privacy3)Ease of residence4)Political stability 5)Political stability 6)Relaible communications 7)Good life factors.4.How does an international taxpayer make use of a tax haven?(in book P104)methodology 1)Change personal residency.(改变居民身份)Relocate themselves in low-tax jurisdiction.2)Asset holding.(资产持有)Utilize a trust or a company which will be formed in tax haven.3)Trading and other business activity.（生产经营）Set up many businesses which do not require a specific geographical location or extensive labor in tax havens to minimimze tax exposure.4)Financial intermediaries.（通过财务金融中介公司）Use funds,banking,life insurance and pensions.Deposit with the intermediary in the low-tax jurisdiction.5.Does China have anti-tax-haven rules?Yes.In CFC rules.6.What are the advantages of being a tax haven?Being a tax haven ,a jurisdiction can1) have divisions of multinational locating there and employ some of the local population;2)transfer needed skills to the local population;3)go a long way to attracting foreign companies.7.What are the reasons for some jurisdictions desiring to be tax havens?The same as question6.Chapter 7International Transfer Pricing and Rules1.What is International transfer pricing?Transfer pricing refers to a kind of non-market pricing action taken by related corporations to shift profits form high tax rate countries or jurisdictions to low tax rete regions.The main purposes are reduce tax burden and a series of non-tax purposes like 1)occupy market 2)change the subsidiarys image in order to gain other interest 3)avoid currency control 4)minimize the expose to import duty 5)earn excess profit 2.Take an example to prove that International transfer pricing can be used to avoid international tax ?For example,A has a product can be sold at 1000 dollars, but A sold it to B at 100 dollars.Then B will sell it at 1000, 900 profit was shift to Bs countries or jurisdictions,andB was setup in tax haven,the group dont have to pay much tax.3.Whatare the main contents of International transfer pricing rules?International transfer pricing rules are a series of tax manage rules made by countries or governments in order to prevent corporations particularly multinational corporations utilize International transfer pricing to avoid tax ,which cause governments tax run off.4.Termexplanation:comparable uncontrolled price;costplus;resaleprice;transactional net margin method;profit split method;comparabilityanalysis Chapter8Controlled Foreign Corporation and Rules 1.How does a multinational firm use a CFC to avoid tax?In most cases,Chinese firms tend to not distribute or just distribute a little profit from CFC to its parent firm.While, foreign firms usually let the profit stay in the CFC.2.What is CFC?CFC refers to firms controlled by resident firms and theyare often set in low tax rate or no tax reigions.3.What is the relationship between deferral system(延迟缴纳) and CFC rules?The law of many countries does not tax a shareholder of a corporation on the corporations income until the income is distributed as a dividend.This dividend could be avoided indefinitely by loaning the earnings to the shareholder without actually declaring a dividend.The CFC rules were intended to cause current taxation to the shareholder where income was of a sort that could be artificially shifted or was made available to the shareholder.At the same time, such rule were designed to interfere with normal commercial practices.4.What arethe main contents of a countrys CFC rules?The main contents of a countrys CFCrules are to prevent residents (including individuals and firms) using controlled foreign corporation to avoid tax burden.5.When were Chinas CFC rules established?Year 2009.6.Can you name any differences between China and foreign jurisdictions for purposes of CFC rules?7.Must a foreign corporation which is established in a tax haven and controlled by our residents be a CFC for our tax purpose?Why?No.If the foreign corporation is 1)a small corporation(the total profit a year is less than 5 millions);2)the main income was get from positive operating activities, it wont be a CFC for our tax purpose.Chapter9Thin Capitalization and Rules 1.What is thin capitalization?Thin capitalization is a method that taxpayers borrow too much money from oversea related party and pay much interest, so that they can enjoy much deduction before tax.By this way,they transfer profits from high tax burden countries to low tax burden countries or jurisdictions.2.Give an example to prove that thin capitalization can be used to avoid tax.暂无3.What are the main contents of thin capitalization rules?1)The relationship between borrower and lender.2)Thedetermination of excessive interest.3)Treatment of excessive interest: deemed dividend and withholding tax is lavied.4)?4.What are the main features of the USA thin capitalization rules?5.Talk about thin capitalization rules in China China use ALP(arms lenth principle)/fixed Debt-to-Equity Ratio /Earnings stripping(收益剥离法)。Chapter 101.What is international tax treaty?What categories of tax treaty are there?International tax treaty is a treaty a country (or jurisdiction) signed with other countries (or jurisdiction) for affairs about taxation.(1)Tax treaties can be classified into single tax treaty and comprehensive tax treaty.Single tax treaty is for a specific tax and comprehensive tax treaty is for many taxes;(2)classified by type of tax such as VAT treaty, income tax treaty, customs duty treaty and so on;(3)classified by the countries participating in:two-side treaty and multilateral treaty.1.income tax 所得税2.bilateral 双边的3.comprehensive 综合的2.Whattax benefits can tax treaties offer international taxpayers?1)may not face the problem of double taxation2)canenjoy lower withholding tax rate 3.Which should be given priority when the treaty rule conflicts with the domestic tax rule?Domestic tax rule.4.What contents does a typical international tax treaty contain?(in book page 158to 161,C.1 to C.12)Fiscal (tax)Residency;PermanentEstablishment;WithholdingTaxes;Income from Employment;Tax Exemptions for Persons or Entities;Harmonization of Tax Rates;Provisions Unique to Inheritance Taxs; Double Tax Relief;MutualEnforcement;DisputeResolution;Limitations of Benefits;Priority of Law 5.What is treaty shopping?Can you Give an example to prove it?“Treaty shopping “refers to the situation that a company in a country(source country) use a company in a third country to transfer profit/dividend to resident company in home country.Example:Income tax20%?UScoNow0%UKcoCaycoNow0%previouswithholding30%UScoCayco6.Talk about anti-treaty shopping rules.The contents of anti-treaty shopping are:1.the US “LOB”.2. genuine resident.3.unilateral and bilateral treaties4.enforce information managementcommunication.