Research on tax risks in the development of the New Silk Road

Ma Caichen, Shan Miao

Abstract


The paper is studying the tax risks of the Silk Road Economic Belt. Since President Xi Jinping proposed an initiative to jointly build the Silk Road Economic Belt in 2013 when he visited Kazakhstan, the process of regional cooperation on the Silk Road Economic Belt has been further accelerated. With the advancement of the economic and trade exchanges between China and the 16 countries along Silk Road, tax distribution relations have become complicated, and tax risks become an important issue that cannot be ignored. Based on the theory of international tax and using the comparative analysis and empirical analysis, the paper firstly studies the spatial scope of the Silk Road Economic Belt and the institutional environment of the countries along the route, and then mainly analyzes tax risks in the development of the Silk Road Economic Belt and their sources. The study has revealed that there exist large differences in the tax system among the 16 countries along the Silk Road and poor coordination in the tax system, especially in respect of corporate income tax. Coupled with the influence of language barriers, it is difficult for countries to grasp each other’s taxation policies and regulations in a timely and comprehensive manner. Finally, the paper proposes the path to prevent the risks of the Silk Road Economic Belt. The main conclusions are: the countries along the Silk Road Economic Belt have hugely different tax system and incomplete tax treaty system, implying big risks for Base Erosion and Profit Shifting (BEPS); the risk sources are that lack of tax collection and management capacity to adapt to international tax rules, and neither enterprises nor tax service departments pay due attention to tax risks; the countries along the Silk Road Economic Belt should optimize open and friendly taxation policies, promote tax coordination, and improve tax collection and management capacities to prevent tax risks.

HIGHLIGHTS

1. Regional economic cooperation is always accompanied by tax risks. Accordingly, to effectively prevent tax risks will become a booster for the prosperity and development of the Silk Road Economic Belt

2. There are three main tax risks in the development of Silk Road Economic Belt: differences in the tax system, the incompleteness of the tax treaty system, and the risks under the background of BEPS

3. Tax risks of the Silk Road Economic Belt mainly stem from two aspects. First, weak tax collection and management capacity, and second, lack of sufficient attention to tax risks

4. Based on the current development status and tax risks for Silk Road Economic Belt, strengthening the tax risks prevention can be respectively planned from three perspectives, including domestic tax system, international coordination, tax collection and management

FOR CITATION

Ma Caichen, Shan Miao. Research on tax risks in the development of the New Silk Road. Journal of Tax Reform, 2018, vol. 4, no. 3, pp. 250–265. DOI: 10.15826/jtr.2018.4.3.055

ARTICLE INFO

Received July 28, 2018; accepted September 23, 2018

 


Keywords


the Silk Road Economic Belt, tax risk, tax treaty, tax capacity

References


Chen Youxiang, Dong Qiang. To Establish a Coping Mechanism for Taxation Risks Under the Strategy of “The Belt and Road Initiative”. Tax and Economic Research, 2015, no. 6, pp. 49–55. (In Chinese).
2. Li Daokui, Cheng Hao. Foundation for Cooperation and Investment Strategy of the Silk Road Economic Belt. Reform, 2015, no. 8, pp. 29–38. (In Chinese).
3. Bai Yongxiu, Wang Songji. Deep Background and Geopolitical Strategy of the Silk Road Economic Belt. Reform, 2014, no. 3. (In Chinese).
4. Owens J. Research on Tax Issues in the Development of New Silk Road. International Taxation in China, 2017, no. 4, pp. 64–67.
5. Liu Peng. Comparison on Corporate Tax System of Countries Along “the Belt and Road Initiative”. Shanghai Journal of Economics, 2016, no. 1. (In Chinese).
6. Chen Hu. Attempting Discussion on Taxation Information Exchange Mechanism of “The Belt and Road” Countries. Taxation Research, 2016, no. 7, pp. 94–98. (In Chinese).
7. Oguttu A. W. Tax Base Erosion and Profit Shifting in Africa- Part 1: Africa ‘s Response to the OECD BEPS Action Plan. ICTD Working Paper, 2016, vol. 54. DOI: 10.2139/ssrn.3120328
8. Junlan Du, Yifei Zhang. Does One Belt One Road Initiative Promote Chinese Overseas Direct Investment. China Economic Review, 2018, no. 47, pp. 189–205. (In Chinese).
9. Li Helin. Development Tendency of Pricing Rules for Transfer of Intangible Assets and the Enlightenment of China Coping with BEPS. Taxation Research, 2014, no. 8, pp. 69–73. (In Chinese).
10. Kong Danyang, Wang Baojie. Serving the Strategy of “The Belt and Road” Starts from Setting Up the Tax Risks Thinking. International Taxation in China, 2016, no. 4, pp. 65–68. (In Chinese).
11. Liu Rong, Wang Xin, Mao Rui. Comparison on Competitiveness of Tax Collection and Management of “The Belt and Road” Countries. Taxation Research, 2017, no. 2, pp. 3–8. (In Chinese).
12. Li Xiangju, Wang Xiongfei. Research on Enterprise’s Tax Risks and Prevention Methods Under the Strategy of “The Belt and Road”. East China Economic Management, 2017, no. 5, pp. 134–139. (In Chinese).
13. Kong Danyang, Wang Baojie. Serving the Strategy of “The Belt and Road” Starts from Setting Up the Tax Risks Thinking. International Taxation in China, 2016, no. 4, pp. 65–68. (In Chinese).
14. Wen Lei, Zhang Shuhui. Taxation Coordination Problems in the Silk Road Economic Belt. Taxation Research, 2015, no. 6, pp. 26–40. (In Chinese).
15. Xiong Lu. International Comparison and Reference of Foreign Investment Tax Systems. Finance and Economy, 2012, no. 7, pp. 31–34. (In Chinese).
16. Huo Zhiyuan, Yang Leidong. Reflection on Tax Risks Management of China’s “Going Global” Enterprises. Taxation Research, 2016, no. 11, pp. 68–70. (In Chinese).
17. Chen Zhan et al. Analysis on Related Issues of Tax Services Under the Strategy of “The Belt and Road”. Taxation Research, 2016, no. 3, pp. 34–37. (In Chinese).
18. Zeng Wenge, Bai Yu. Discussion on China’s Foreign Taxation System Arrangement Under the Strategy of “The Belt and Road”. Jiangxi Social Sciences, 2017, no. 5, pp. 13–24. (In Chinese).
19. OECD. Manual on the Implementation of Exchange of Information Provisions for Tax Purposes. OECD, 2006. 22 p. Available at: https://www.oecd.org/tax/exchange-of-tax-information/36647823.pdf
20. Yao Jian, Wang Zhoufei, Chen Aiming. Tax Risks Management in the Context of Big Data. Taxation Research, 2015, no. 11, pp. 64–67. (In Chinese).




DOI: http://dx.doi.org/10.15826/jtr.2018.4.3.055

Copyright (c) 2018 Ma Caichen, Shan Miao

eLibrary logoeLibrary logo  DOAJ logo ERIH PLUS logo 

© Journal of Tax Reform : ISSN 2414-9497 (online), ISSN 2412-8872 (print)