The Challenge of Digital Cross-Border Transactions to the Enterprise Income Tax System and China's Response
The rapid development of the digital economy and the rapid advancement of global economic digiti-zation have given rise to new business models,significantly changing economic formats.However,the traditional tax system follows the principle of independent transactions.When multinational enterprise groups engage in cross-border transactions without a physical connection to a permanent establishment,market countries do not have the right to tax and cannot tax them.This is a fundamental challenge to the tax system posed by the development of the digital economy and economic digitization,which in turn brings problems such as tax base erosion and difficulty in ensuring market competition fairness.The Organization for Economic Co-operation and Development(OECD)has been promoting the"dual pillar"plan in recent years,and reached a final consensus in October 2021.This article starts from the implementation of the"Pillar One"scheme in China's domestic law,applies the rules and concepts of the"Pillar One"scheme,focuses on the tax jurisdiction,tax payers,tax objects,tax base,and other aspects of China's Enterprise Income Tax Law,and proposes countermeasures for the revision and improvement of China's Enterprise Income Tax Law,providing reference for the reform of China's Enterprise Income Tax System.
digital cross-border transactionsenterprise income tax system"Pillar One"schemenew taxa-tion rightsEnterprise Income Tax Law