CURRENT TRENDS IN CASE LAW ON CROSS-BORDER TAX DISPUTES IN CHINA

Abstract

Introduction: tax disputes in China cover a wide range of relationships and transactions. The number of court decisions is limited, but they allow us to determine a number of trends related to the resolution of tax disputes. In particular, Chinese courts do not take into account the opinion of the Organization for Economic Cooperation and Development (OECD) in resolving such cases. This might be rooted with China’s position to protect the interests of the state as a reflection of it being one of the largest foreign investment recipients in the world. Methods: analysis, comparison, description, interpretation. The subject of the study were the rules of law and decisions of Chinese courts on the resolution of tax disputes, as well as statistical data. Analysis: disputes may most possibly arise from those anti-tax avoidance investigations carried out by Chinese tax authorities. The aggressive approaches that Chinese tax authorities used in interpreting and applying tax treaties might trigger more cross-border tax disputes. And this risk will be exacerbated when tax authorities are pressed to meet the revenue target assigned to them. Results: while aggressive anti-avoidance measures are becoming effective tools for collecting incomes, the number of disputes is growing. As a consequence, the role of the judiciary in the mechanism of legal protection of participants in tax disputes will also increase. It seems that the number of appeals to the courts for the resolution of such cases will increase too.