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The influence of the new regulations of GAAR on Cross-border transactions

The influence of the new regulations of GAAR on Cross-border transactions     Download

December 2, 2014, the State Administration of Taxation released "General Anti-avoidance Management (Trial)". The rules, as a form of the administrative order of the State Administration of Taxation, further clarify and standardize the issues of the application ranges, the judgment criteria, the adjustment methods, working procedures, dispute settlements and the like, when the tax authorities take the general anti-avoidance measures.
This document is published on the basis of current world economic development situation and the transformation of the tax law enforcement environment. With the further development of economic globalization, more and more multinational enterprise groups try to avoid or reduce the overall tax obligations through the globalized management pattern and complex tax planning, causing tax base erosion in most of the countries worldwide and drawing high attention of the international society. To this end, the Group of 20 (G20) authorized the Organization for Economic Cooperation and Development (OECD) to implement plans and actions dealing with "base erosion and profit shifting (BEPS)", which sparked a global wave of cracking down on base erosion and profits shifting. In September this year, OECD published seven staged achievements of BEPS. In recent international conferences, the Chinese leaders also put forward suggestions that “strengthen the cooperation of global tax, combating international tax evasion and tax avoidance, help developing countries and low-income countries improve ability of collecting and managing tax”.
In this context, the document "Regulation" was formally issued after wide consultation, in an effort to standardize the general anti-avoidance work of the tax authority and strengthen the monitoring management of cross-border tax sources at the same time.
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