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＂Cross-Strait Taxation Agreement＂ (hereinafter referred to as ＂CSTA＂) was officially signed by the Straits Exchange Foundation (SEF) and the Association for Relations Across the Taiwan Straits (ARATS) on August 25, 2015. The tax year went into effect on January 1st of the subsequent calendar year after the CSTA takes effect. Taiwan has not completed its legislation since the signing of the ＂Enactment of the Law on Control of Cross-Strait Agreements＂ yet, so CSTA just signed does not take effect. The main purpose of the CSTA for Taiwan is to avoid the double taxation on the income received by individuals and enterprises across Taiwan and Mainland China. The estimated effect will reduce the income tax burden of Taiwan enterprises, Taiwan businessmen and Taiwan cadres. It would also increase the competitiveness of Taiwan businessmen on the Mainland China and create the attractiveness of investment to Taiwan, with investment opportunities to create economic growth. The result is expected to bring huge benefits.
To comply with the tax equity, Taiwan has legislated to regulate the income taxes of the Taiwan tax residents. Due to the use of tax avoidance, resulting in Taiwan enterprises, Taiwan businessmen, Taiwan cadres income tax base loss and profit transfer. The Ministry of Finance can not successfully obtain income data on the tax revenue of taxpayers. This article illustrates that the tax avoidance behavior reduces the efficiency of CSTA. In fact, the success of the tax benefits of CSTA is mainly due to the spontaneous nature of Taiwan enterprises, Taiwan businessmen and Taiwan cadres, and the tax authorities for tax inspection and their attitude.
The Legislative Yuan, Republic of China (Taiwan) has passed the Basic Erosion and Profit Shifting (BEPS) of income tax§43-3, §43-4 and Basic Tax Ordinance §12. The main content is for the holding of foreign companies (CFC) and effective management (PEM) legislation. If Taiwan and international countries have signed a common reporting standard (CRS). Therefore, the anti-avoidance laws take effect, and with Taiwan and international countries can automatically exchange financial account information, is expected to strengthen the effectiveness of CSTA.
Key words: Cross-Strait Taxation Agreement； Double Taxation； Base Erosion and Profit Shifting； Common Reporting Standard. | en_US |