模板ch 2 jurisdiction to tax 税收管辖权.ppt

A temporary trip away from China refers to a trip from China not exceeding 30 days on one trip or the combined number of days on several trips away from China not exceeding 90 days within one tax year. 最新. * 2. Residence of Legal Entities The residence of a corporation is generally determined either by reference to its place of incorporation or its place of management. 最新. * (1) The place-of-incorporation test: (Legal domicile) Advantage: provides simplicity and certainty to the government and the taxpayer. E.g. Countries that market themselves as tax havens typically offer convenient and inexpensive arrangements for incorporation under their laws. 最新. * Disadvantage: places some limits on the ability of corporations to shift their country of residence for tax avoidance (?)purposes. Because a corporation should first liquidate its assets before it change its place of incorporation. Then it should pay the tax on value added of its assets i.e. capital gain. 最新. * (2) The place-of-management test: (fiscal domicile) Disadvantage: It is less certain in its application. Practical tests include the location of the company’s head office or the place where the board of directors meet. Advantage: It is easily exploited for tax avoidance reasons. ( Case on page 19) 最新. * Another example: Jacob Schick, the inventor of the Schick disposable razor, transferred his razor patent to a Bermuda corporation that accumulated the royalties; Schick later proceeded to give up his U.S. citizenship and retire to Bermuda, where he lived on the accumulated tax-free profits. 最新. * One opinion: The proper purpose of the corporate tax is to impose tax burden on the corporation’s shareholders. Assuming that purpose, the test of residence of a corporation might properly be determined by reference to the residence of its shareholders. But it is difficult to determine in fact, why? 最新. * In practice, (1) Only place-of-incorporation test: Denmark, Egypt, France, Sweden, Thailand, U.S. (2)