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
Highlights
The complete manual currently consists of the following Modules: General Module - General and legal aspects of exchange of information Module 1 - Exchange of information on request Module 2 - Spontaneous exchange of information Module 3 - Automatic exchange of information Module 4 - Industry-wide exchange of information Module 5 - Simultaneous tax examinations Module 6 - Tax examinations abroad Module 7 - Country profiles regarding information exchange Module 8 - Information exchange instruments and models
The modular approach allows countries to choose only the parts that are relevant to their specific exchange programs
The goal of the present manual is to provide officials dealing with exchange of information for tax purposes with an overview of the operation of exchange of information provisions and some technical and practical guidance, in order to improve the efficiency of such exchanges
Summary
The exchange of information under the Model Agreement applies to the administration and enforcement of the taxes covered by the Agreement.[17] The Model Convention uses a different approach and Article 26 applies to taxes not otherwise covered. The Council of Europe/OECD Convention lists the taxes to which it applies in Article 2, paragraph 1. Example 1: Country A and country B have entered into a tax convention that follows the OECD Model Convention, i.e. while the convention generally only covers taxes on income and capital the exchange of information article contains no such restriction. The competent authority in country B cannot refuse to comply with the request on the grounds that sales taxes are not otherwise covered by the convention. The competent authority in country B does not have to comply with the request because sales taxes are not covered by the agreement
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