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Articles 31 - 60 of 95
Full-Text Articles in Tax Law
Local Tax Incentives And Behavior Of Foreign Enterprises: Evidence From A Large Developing Country, Jing Xing, Wei Cui, Xi Qu
Local Tax Incentives And Behavior Of Foreign Enterprises: Evidence From A Large Developing Country, Jing Xing, Wei Cui, Xi Qu
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We analyze how profit reporting and investment behavior of foreign enterprises respond to local tax incentives in China, a large developing country. Using firm-level data between 2000 and 2013 from China’s industrial enterprise survey, we first provide strong evidence for tax competition among Chinese cities (especially cities within the same province) over the average effective income tax rate. We then find that, despite stringent capital controls, both reported pre-tax profits and investment of foreign firms respond strongly to local tax incentives, suggesting that subnational tax competition in China is oriented towards both mobile profits and real resources.
Minimalism About Residence And Source, Wei Cui
Minimalism About Residence And Source, Wei Cui
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Many economists and legal scholars claim that the traditional conceptual and policy framework for international taxation is defunct. The examples they offer most often to support such claims are failures of residence- or source-based taxation to achieve a variety of normative objectives. This article suggests that there is a very different way of seeing why international taxation has become intellectually controversial. The key problem is not that the globalization of economic activities makes the traditional policy tools outdated; instead, it is that scholars and policymakers have more frequent occasions to disagree about the normative goals of international taxation. Thus most …
Canada: Limitation On The Elimination Of Double Taxation Under The Canada-Brazil Income Tax Treaty, David G. Duff
Canada: Limitation On The Elimination Of Double Taxation Under The Canada-Brazil Income Tax Treaty, David G. Duff
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This short comment reviews the Tax Court of Canada decision in Société générale valeurs mobilieres inc. v. The Queen, addressing the interpretation of the elimination of double taxation article in the Canada-Brazil Income Tax Treaty. The comment argues that the Court rightly rejected the taxpayer’s argument that treaty relief should extend to Canadian tax otherwise payable on gross interest income without taking into account any expenses incurred to earn this income, accepting the revenue department’s argument that treaty relief was limited to Canadian tax otherwise payable on net interest income earned in Brazil.
Does Judicial Independence Matter? A Study Of The Determinants Of Administrative Litigation In An Authoritarian Regime, Wei Cui
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Lawsuits against the government form a part of the regular functioning of legal systems in democratic countries, and responding to such lawsuits an unavoidable part of governance. However, in the context of authoritarian regimes, administrative litigation has been viewed as a distinctively valuable institution for promoting the rule of law and individual rights. Moreover, the judiciary is portrayed as the keystone to this institution and to the rule of law in general: the more powerful and competent is the judiciary, the more it is able to “constrain government” through judicial review. Through empirical and comparative analyses of over two decades …
Taxation Of Non-Residents' Capital Gains, Wei Cui
Taxation Of Non-Residents' Capital Gains, Wei Cui
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Designing and enforcing a legal regime for taxing non-residents on capital gains realized from domestic sources is a topic of vital importance for developing countries. The reason is that non-capital-gain income that may be derived from a given country can generally be crystalized in the form of capital gains on the disposition of the income-generating asset. This is true of most important types of income, be it rent, interest, royalty, dividend or business profit. Taxing capital gains, therefore, is invariably needed to ensure that income from assets in the source country is properly subject to tax. In this sense, capital …
Taxation Without Information: The Institutional Foundations Of Modern Tax Collection, Wei Cui
Taxation Without Information: The Institutional Foundations Of Modern Tax Collection, Wei Cui
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A prominent strand of recent economic and legal scholarship hypothesizes that third-party information reporting (TPIR) is essential to modern tax collection. The slogan, “no taxation without information,” has captured researchers’ imagination and is even often presented as self-evident truth. This Article offers a fundamentally different perspective, arguing that the emphasis on TPIR is misplaced. TPIR is used largely in the collection of the personal income tax but not of many other types of modern taxes. Even for the personal income tax, TPIR also has close substitutes which do not involve information transmission to the government. Theoretically, the appeal to TPIR …
Destination-Based Cash-Flow Taxation: A Critical Appraisal, Wei Cui
Destination-Based Cash-Flow Taxation: A Critical Appraisal, Wei Cui
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This article offers the first comprehensive scholarly response to proposals for destination-based, cash-flow taxation (DCFT). DCFT proposals have attracted heightened public attention in 2016 because of its incorporation into the U.S. House Republican Blueprint for tax reform and Donald Trump’s subsequent election to the White House. They also continue to fascinate tax specialists by suggesting that corporate profit can not only be taxed in countries of “source” or “residence,” but also (or even exclusively) in the countries where sales to final consumers occur. This Article clarifies the logical structure of DCFT proposals and exposes substantial gaps between their rhetoric and …
Destination-Based Taxation In The House Republican Blueprint, Wei Cui
Destination-Based Taxation In The House Republican Blueprint, Wei Cui
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The House Republican Task Force on Tax Reform released its Blueprint for tax reform in June 2016, at the center of which is a destination-based cash-flow tax (DBCFT) to replace the current federal income tax on corporations. The House GOP Blueprint represents the first time that the DBCFT has been promoted by political leaders. Initial commentators have stressed the capacity of such a tax (if adopted in the U.S.) to reduce U.S. companies’ incentives for international tax planning and profit shifting, and to allow the U.S. to “leapfrog to the front of the pack” in its tax competitiveness. This essay …
Alternatives To The Gift And Estate Tax, David G. Duff
Alternatives To The Gift And Estate Tax, David G. Duff
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Following the near death experience of the federal gift and estate tax in 2010, the hundredth anniversary of the tax represents an ideal moment to reflect on the role of this tax and whether an alternative approach might be more desirable and sustainable. This Article examines four prominent alternatives to the current tax: an annual wealth tax, taxing unrealized gains at death, including gifts and inheritances in income, and a lifetime accessions tax that would apply to the cumulative value of gifts and inheritances received by individuals over their lifetimes. In order to assess these alternatives, the Article reconsiders the …
Tax Policy And The Virtuous Sovereign: Dworkinian Equality And Redistributive Taxation, David G. Duff
Tax Policy And The Virtuous Sovereign: Dworkinian Equality And Redistributive Taxation, David G. Duff
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Among the purposes of a tax system, it is generally accepted that one role is to implement a society’s conception of distributive justice. Indeed, if justice is, as John Rawls famously declared, “the first virtue of social institutions,” distributive justice may properly be regarded as the first or sovereign virtue of a society’s tax system – to which a virtuous sovereign should properly attend. This article reviews Ronald Dworkin’s theory of distributive justice as equality of resources and its implications for redistributive taxation. Part II examines the theory itself in contrast to other prominent theories of distributive justice, arguing that …
Taxation Of State Owned Enterprises: A Review Of Empirical Evidence From China, Wei Cui
Taxation Of State Owned Enterprises: A Review Of Empirical Evidence From China, Wei Cui
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This chapter reviews empirical evidence from China that bears on the general theory of the income taxation of state-owned enterprises (SOEs). Prior theoretical literature has offered three conflicting views of SOE taxation. The first is that SOE taxation is superfluous, because the government shareholder can simply demand profit distributions. The second is that SOE taxation is necessary to put state-owned and private firms on an equal competitive footing. The third view holds that the significance of SOE taxation lies in the fact that SOE managers, like managers of private firms, may be dividend averse; in the absence of other effective …
The Historical Origins Of The Debt-Equity Distinction, Camden Hutchison
The Historical Origins Of The Debt-Equity Distinction, Camden Hutchison
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The U.S. tax code favors corporate debt over corporate equity, a distinction long criticized by economists, legal scholars, and other tax commentators as both theoretically and practically unsound. For decades, academics and policymakers from a variety of disciplinary and political backgrounds have argued that this so-called “debt-equity distinction” distorts corporate financing decisions, encourages excess borrowing, and invites troublesome tax-avoidance behavior. Surprisingly, despite widespread critical attention, the origins of this policy remain a mystery. Primarily focused on its contemporary significance, scholars have disregarded the distinction’s past. This article uses historical evidence to trace the debt-equity distinction’s origins, development, and continuing evolution. …
Taxing State-Owned Enterprises: Understanding A Basic Institution Of State Capitalism, Wei Cui
Taxing State-Owned Enterprises: Understanding A Basic Institution Of State Capitalism, Wei Cui
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State-owned enterprises (SOEs) have become active investors in global markets in the last decade, challenging policymakers in Canada and other OECD countries to confront the logic of “state capitalism.” This article develops a novel theory of the income taxation of SOEs. Many countries subject their SOEs to the income tax, but economists tend to dismiss SOE taxation as superfluous. A contrary, popular belief holds that SOE taxation is necessary to ensure fair competition. This article shows that both views are mistaken and explains SOE taxation in terms of the agency problem for dividend policy. Because typical devices to give private …
China's Business-Tax-To-Vat Reform: An Interim Assessment, Wei Cui
China's Business-Tax-To-Vat Reform: An Interim Assessment, Wei Cui
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The reform to replace the Business Tax (BT) with the VAT is the largest tax reform initiative in China since 1994. This article assesses the first two years of the reform from a tax policy perspective. It shows that the government has tried to preempt resistance to reform through highly unusual tax design and by allowing local governments to retain revenue from pilot sectors. The VAT for pilot sectors is characterized by two new reduced rates that apply to a wide range of business-to-business transactions as well as consumer services (such as internet and mobile data services) not generally regarded …
Administrative Decentralization And Tax Compliance: A Transactional Cost Perspective, Wei Cui
Administrative Decentralization And Tax Compliance: A Transactional Cost Perspective, Wei Cui
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A common phenomenon in tax administration in developing countries is that tax is collected not according to the rules of law but according to informal agreements between taxpayers and tax collectors. This article offers a novel explanation of this phenomenon in the Chinese context in terms of administrative decentralization. Administrative decentralization is defined as the concentration of government functions at the lowest ranks of a geographically-dispersed bureaucracy. Decentralization increases communication costs associated with the implementation of law, and changes the structure of taxpayers’ costs in obtaining knowledge about the law. As a result, a “semi-compliant” type of behavior, involving many …
Taxing Indirect Transfers: Improving An Instrument For Stemming Tax And Legal Base Erosion, Wei Cui
Taxing Indirect Transfers: Improving An Instrument For Stemming Tax And Legal Base Erosion, Wei Cui
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Numerous countries (e.g. Canada, Australia and Japan) tax foreigners on the gain realized on their transfers of interests in foreign entities that invest in real estates in these countries. In the last few years, actions taken by tax authorities in India, China, Brazil, Indonesia and other non-OECD countries have highlighted the possibility of taxing a broader range of “indirect transfers” by foreigners. This Article argues taxing indirect transfers can have vital policy significance in countries where foreign inbound investments are actively traded in offshore markets: it may not only deter tax avoidance, but also stanch “legal base erosion” — the …
The Origin Of The High Centralization Of Tax Legislative Power, Wei Cui
The Origin Of The High Centralization Of Tax Legislative Power, Wei Cui
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The high degree of centralization of tax legislative power in China has produced frequent controversies in practice, and is also fundamentally inconsistent with certain basic principles of public finance and the rule of law. However, this arrangement is commonly assumed as a given for the contemporary Chinese policy. This article challenges this prevalent view. It argues that the centralization of tax legislative power began only in 1977, and was by no means a fixed institution before that time. Moreover, such centralization strengthened between 1977 and 1993, which was a period regarded as the golden age of fiscal decentralization. Thus there …
The China-United Kingdom Income Tax Treaty (2011), Wei Cui
The China-United Kingdom Income Tax Treaty (2011), Wei Cui
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The author, in this article, considers some of the key features of the China-United Kingdom Income Tax Treaty (2011), with particular reference to the provisions on technical fees, permanent establishments, passive and other income, and anti-avoidance rules.
The Inefficiencies Of Legislative Centralization: Evidence From Provincial Tax Rate-Setting, Wei Cui, Zhiyuan Wang
The Inefficiencies Of Legislative Centralization: Evidence From Provincial Tax Rate-Setting, Wei Cui, Zhiyuan Wang
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Legislative power in China is centralized to an unusual degree. This arrangement is both positively and normatively significant, but has received little attention in prior scholarship. We devise a novel method for analyzing the consequence of centralization by examining provincial rate setting for the vehicle and vessel tax (VVT). Because all provinces have assigned VVT revenue and VVT administration to sub-provincial governments, provincial rate-setting represents centralized, not decentralized, decision-making. Using spatio-econometric analyses, we find that provincial tax rate choices fail to reflect local economic and demographic conditions and display traces of tax mimicking. Both support the hypothesis that provincial officials …
Tax Treatment Of Charitable Contributions In A Personal Income Tax: Lessons From Theory And Canadian Experience, David G. Duff
Tax Treatment Of Charitable Contributions In A Personal Income Tax: Lessons From Theory And Canadian Experience, David G. Duff
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A hundred years after tax concessions for charitable contributions were introduced as part of the personal income taxes that many countries enacted during the First World War, these countries continue to debate the appropriate level and structure of tax concessions for charitable gifts. This chapter considers the tax treatment of charitable contributions in a personal income tax, reviewing and evaluating alternative rationales for tax recognition of charitable gifts as well as the implications of these rationales for the form that tax recognition should take, and examining recent Canadian experience in light of these rationales.
Objections To Taxing Resale Of Residential Property Under A Vat, Wei Cui
Objections To Taxing Resale Of Residential Property Under A Vat, Wei Cui
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The “pre-collection” of tax on imputed consumption generated by owner-occupied housing plays a crucial role in both consumption tax theory and real-world tax regimes. However, even under current VAT systems with the widest tax bases, the taxation of imputed housing consumption is incomplete because pre-existing housing stock is typically not taxed when the VAT is introduced, and because housing value may appreciate after initial sale. In response, some have recommended taxing residential re-sale to capture previously untaxed consumption value. This paper argues that because the incidence of any properly-designed tax on resale will fall only on economic rent and existing …
China's Tax Policy Response To The Global Financial Crisis, Wei Cui
China's Tax Policy Response To The Global Financial Crisis, Wei Cui
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VAT reform constituted the most important tax policy action China took during the global financial crisis in 2008-9. If China had had a more typical tax structure, this specific policy instrument (as well as certain others) would not have been available. Conversely, because of the idiosyncrasies of China’s current tax structure, some of the policy measures commonly deployed in other countries also cannot be used. In comparing China and Europe in the tax policies adopted since 2008, therefore, major differences in prior tax structures must be taken into account. There are also two other potential determinants of China’s tax policy. …
Foreign Administrative Law And International Taxation: A Case Study Of Tax Treaty Implementation In China, Wei Cui
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U.S. taxpayers and the IRS increasingly have to take into account the interactions between U.S. and foreign laws, but they have paid little attention to the administrative law backgrounds of foreign tax laws. In a growing range of cases, the need for such attention has become urgent. This Article describes a novel class of cases encountered by U.S. taxpayers that emanate from tax treaty implementation in China. In these cases, U.S. (and other foreign) investors face certain rules that conflict with common treaty interpretations, and that, at the same time, are not legally binding under Chinese domestic law. The question …
China: A New (Furtive) Approach To Taxing International Transportation Income, Wei Cui
China: A New (Furtive) Approach To Taxing International Transportation Income, Wei Cui
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Donghwa Industrial Corporation v. Weihai Huancui State Tax Bureau: China's New (Furtive) Approach to Taxing International Transportation Income
What Is The 'Law' In Chinese Tax Administration?, Wei Cui
What Is The 'Law' In Chinese Tax Administration?, Wei Cui
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In December 2009, in just weeks of proximity to the issuance of several controversial, arguably ultra vires tax circulars by the Ministry of Finance and by the State Administration of Taxation (SAT), the latter agency promulgated a seminal regulation governing informal rulemaking activities of all tax authorities in China. This regulation took effect on July 1, 2010, and promises to significantly improve the clarity, transparency, predictability, and quality of tax rulemaking. Ironically, it can also be seen as a rebuke to a cynical view that is rather prevalent among Chinese tax practitioners and reinforced by the recent problematic tax circulars. …
Fiscal Federalism In Chinese Taxation, Wei Cui
Fiscal Federalism In Chinese Taxation, Wei Cui
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The recent policy literature on fiscal federalism in China has concentrated on the large “vertical fiscal gap” resulting in inadequate local provision of public goods and services. Thus there is an evident interest in giving local governments more taxing powers. After a brief historical survey, the article discusses a 1993 State Council directive that centralized taxing power. This has led local governments to make use of their control over tax administration to alter effective tax rates, and to the practice of “refund after collection”, whereby local governments disguise tax cuts as expenditures, following a logic opposite to tax expenditures. This …
Two Paths For Developing Anti-Avoidance Rules, Wei Cui
Two Paths For Developing Anti-Avoidance Rules, Wei Cui
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The author discusses the administration of anti-avoidance rules in China, and puts forth the argument that anti-avoidance rules are being applied in China not only in the absence of the rule of law, but also parallel to the rule of law. He suggests that Chinese taxpayers and tax administrators collectively have the choice of pursuing discussions about the boundary between legitimate and illegitimate tax planning along two paths the rule of law figures as an important norm, while in the other it t, and he discusses how each works in China.
The Tax Consequences Of Corporate Reorganisations In China, Wei Cui, Richard Krever
The Tax Consequences Of Corporate Reorganisations In China, Wei Cui, Richard Krever
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The story of China’s income taxation of corporate reorganisations falls into four distinct periods. The first years of the development of a market economy were a period of benign neglect as tax authorities came to grips with a new tax system and some domestic taxpayers exploited unintended exemptions for reorganisation transactions. A dialectic emerged during the second period of reform with a shift towards a more conventional company tax system based on widely-accepted normative tax principles, while at the same time concessional rules were enacted for transactions favoured by the economic planners. The third stage saw a winding back of …
Establishment': A Core Concept In Chinese Inbound Income Taxation, Wei Cui
Establishment': A Core Concept In Chinese Inbound Income Taxation, Wei Cui
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Analogous with the concept of a US "trade or business" in US federal income tax law, the concept of "establishment" under Chinese tax law determines the boundary between net-income and gross-income taxation of inbound investments. As central as the concept is, it has received surprisingly little interpretation. As China increasingly opens to foreign portfolio investment and makes new non-corporate business forms available to foreigners, the term is urgently in need of clarification. This Article describes the recent regulatory and commercial developments in China that may rekindle interest in elaborating the meaning of "establishment." It then discusses the interpretations that have …
China, Wei Cui
China, Wei Cui
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The Chinese indirect tax system is on the eve of a major overhaul, with the integration of the VAT and business tax (BT) to start in select industries in Shanghai on January 1, 2012. This paper provides an overview of China's idiosyncratic VAT as well as the BT as they stood towards the end of 2010. BT law and practice are discussed only in connection with select conceptual issues such as the exclusion from the VAT/BT base, place of supply, etc. This decision is based on the considerations that many of the legal issues arising under the VAT cannot be …