Multinationals’Walkthrough of Tax Evasion.docVIP

Multinationals?Walkthrough of Tax Evasion Recently, the taxation of 403 million yuan from the largest non-resident-enterprise indirect stock transfer in China was successfully paid to the Shanxi taxation department. The trade happened between a BVI offshore company and a Shanxi-based energy company. The amount of regained tax hit the historical high, outnumbering the taxation amount of 306 million yuan from the indirect stock transfer between a Japanese enterprise and China?s beverage giant Master Kang. The taxation department in Jincheng, Shanxi, spent one year in collecting this duty. After several negotiations, the tax collector and payer reached a compromise – the latter finally agreed to pay the tax according to the taxation law of China. “If we have not anti-tax evasion methods, this 400-million-yuan taxation amount cannot be collected,” said Wang Jun, founder of the Zhonghan International Transfer Pricing Alliance. The antitax evasion methods refer to the active measures taken by the government to prevent and stop the tax evasion activities. These measures are usually applied against the multinationals and foreign-invested companies, which make use of the systematical loopholes to avoid tax payment through affiliated companies and overseas trades. In March 2012, the General Administration of Taxation held a national conference, in which the deputy director of this department said that the anti-tax evasion measures contributed to the additional taxation of 23.9 billion yuan in 2011. Prof. He Yang from the Taxation School at the Central University of Finance and Economics told us that the multinationals are tending to make use of differences among the taxation systems of different countries as the global trade and investment are goring, which somewhat undermines the taxation base of these countries. In addition, developing countries are more likely to become a victim of this activity due to their imperfect taxation administration and related