Austrian Chinese Tax Research Network
More than two millennium ago, Eurasian countries opened their trade routes linking Asia, Europe and Africa. The Silk Road symbolized the spirit of a shared cultural heritage. Today, that heritage is being relaunched by China, with its “Belt and Road” initiative. The aim is to develop new overland and maritime links, which will once again bring together China, Central Asia, Russia, Africa, and Europe and link these countries to both the Indian Ocean and the Mediterranean Sea. The implementation of the “Belt and Road” initiative (BRI) will focus on improving the inter-connectivity between the countries along the route and will open up new opportunities for investment in communication links (road, rail and shipping) and new opportunities for cooperation in the areas of energy, transportation, agriculture and manufacturing.
The emphasis will be to develop an open, inclusive relationship between countries recognizing that civilization thrive when trade growths. This is why the Belt and Road forum for international cooperation (BRF) which was held in Beijing on the 14-15 May 2017 and which brought together over 100 countries, emphasized that promoting trade, FDI and innovation will be three of pillars of this initiative, which is also seen as supporting the 2030 agenda for sustainable development.
At a time when the world is experiencing political and economic uncertainty and when the US is withdrawing from a multilateral and interconnected world, the hope is that by bringing countries together this initiative will encourage mutual respect, harmony, and will provide a much needed boost to global growth.
In 2008, the Institute initiated a dialogue with three research institutes in China to provide a solid conceptual basis for the on-going tax reforms that China has been undertaking. The program initially focused on the corporate taxation and tax treaties. In 2012, the program was broadened to include VAT and a range of tax policy issues and the partnership extended to other research institutes including in the Ministry of Finance (MoF) and the State Administration of Taxation (SAT) in China.
The joint program takes the form of :
Joint research projects
Joint conferences and workshops
Providing summer courses in Chinese universities
Providing training seminars for SAT officials
Providing training programs for Chinese MNEs
The current focus of the program:
Belt and Road Initiative (BRI)
Developing a Tax Environment which Facilitates the “One belt, one road” Vision of China.
This initiative will require trillions of dollars of long term investment in infrastructure mainly financed by private companies. There is a need to avoid that the interaction between the tax systems along the route discourages this investment. This will require reexamining the tax treaties and transfer pricing rules of the relevant countries, looking at mechanisms to resolve tax disputes, developing models to guide the interaction of VAT systems, harmonizing excise and tariffs. It will also require a review of BRI tax treaties to ensure a fair sharing of the tax base between BRI countries.
Joint Conference in Beijing (June 2017)
While much has been written about the economic and political aspects of the BRI, there has until recently been little focus on the tax aspects. Yet tax could be a potential barrier to achieve the full potential of this initiative. This forum is intended to fill this gap and will bring together government, business, international and regional organizations from China and the countries on the overland and maritime roads to discuss these tax issues in a neutral forum. The Forum “Removing Tax Barriers to the Belt & Road Initiative (BRI)”, which took place in Beijing on the 12-13 June 2017 intends to identify tax issues (broadly defined to include all forms of taxation, including excises) which will need to be addressed if the BRI is to reach its full potential. The Forum would commission research from leading Chinese and foreign academic institutions, would seek the views of business on solutions to avoid cross border tax disputes along the BRI and would work with the governments along the route. The Forum would also meet on an annual basis in different countries on the route, hold technical workshops on specific issue, publish discussion papers and feed into the policy debate in the relevant countries.
The outcomes from this conference and joint SAT/WU research programs were published in a book: "Removing Tax Barriers to China’s Belt and Road Initiative" (Wolters Kluwer 2018)
The Blockchain and the Digitalization
There is a need to take this issue out of the BEPS context since the focus should be on what tax rules do we need to have the digital economy thrive, whilst at the same time protecting our tax base. This debate needs to encompass corporate taxes, VAT, taxes on big data as well as the regulatory environment.
So far, the nexus between the realization of business income and the physical presence of businesses in the state of source was considered to be very important. The PE concept has been used to determine whether or not a contracting state is entitled to tax business income. The state of source is allowed to tax business income if it is attributable to a PE in that state. Taxation in this case is justified through the consideration of a sufficiently integrated enterprise in the economy of the source state. However, in a digitalized economy where a non-resident company may interact with customers through a website or other digital devices, relying purely on local presence in the source country may need to be reviewed. The purpose of this research will be to analyze the propositions given by the OECD in BEPS Action 1, which deal with the problem of minimization of taxation of digitally based services in the market country by avoiding a physical presence and afterwards to provide the addressees of this research with legitimate alternatives for the amendment of tax treaties of the BRI.
Collaboration with Xiamen University (XMU)
This program is carried out in cooperation with a network of 6 Chinese research institutes.
Summer School of International Tax Law at Xiamen University
Exchange researchers program
Joint WU/Xiamen Conference, July 2018
Collaboration with Central University of Finance and Economics (CUFE)
Tax treaty law and basic case studies course in Beijing to students from PKU/CUFE
Exchange researchers program
Regular joint conference