A Case Analysis of Tax Disputes in EPC International Projects and Risk Prevention Strategies
Engineering,procurement and construction(EPC)international projects are subject to enterprise income tax in the host country if they constitute permanent establishments(PEs)there.There are two common tax disputes related to EPC international projects:first,for the host country,the price of imported equipment should not have been incorporated into the project income to pay tax,however,as the contract is in the name of project contract,it is usually taxed by the tax authorities of the host country based on the total contract price;second,though the competent tax authority of the host country believes that the equipment should not be incorporated into the project price,they will consider that the division between the equipment price and the project price is unreasonable,and require the project price to be re-verified and a supplementary enterprise income tax to be made.Based on typical tax disputes resulting from EPC international project in recent years,the paper analyzes the causes of tax disputes and related solutions in accordance with tax treaties and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting,discusses how to prevent in advance and control in the process,and puts forward suggestions for properly preventing and avoiding those tax disputes,including ensuring the scientific and reasonable transaction structure,strictly regulating the EPC contract text,and making sure the transaction price is objective and fair.
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维普
