Against the backdrop of increasingly fierce international competition, tax system issues have become a key factor affecting international capital flows. The construction of the "the Belt and Road" has created a rare opportunity for enterprises to "go global", but in the face of the complex and volatile international environment and various forms of cross-border trade and cooperation, many enterprises are confused about various tax issues in the "going global". Therefore, at the corporate level, understanding the tax systems of various countries and accurately grasping the terms of tax agreements is crucial for effectively enhancing the competitiveness of overseas investment and continuously deepening international economic cooperation.

At the "the Belt and Road Tax and New International Tax Regulations" promotion meeting jointly held by the Beijing Municipal Commission of Commerce, the Beijing Council for the Promotion of International Trade, the Beijing International Chamber of Commerce, and the Beijing International Association for Economic and Technological Cooperation, Wang Bingming, head of the International Division of the Beijing Local Taxation Bureau, gave a relevant explanation with the theme of "tax treaties serve enterprises' going global".

Tax treaties, also known as avoidance of double taxation agreements, are written agreements negotiated and concluded by two or more sovereign countries (or tax jurisdictions) to coordinate their tax jurisdiction relationships and handle related tax issues. The capital technology or labor exporting country (also known as the country of residence) and the host country (also known as the country of income source) allocate the taxation rights of cross-border business and investment income through signing tax agreements, thereby improving tax certainty, avoiding double taxation, and resolving tax disputes through tax cooperation and bilateral negotiations, protecting the legitimate rights and interests of taxpayers, thereby promoting bilateral economic, technological, cultural, personnel, and other exchanges. Currently, the issue of tax system has become a key factor affecting international capital flows, "Wang Bingming said. China has signed tax agreements with 105 countries, of which 101 have come into effect. In addition, the mainland has also signed tax arrangements with Hong Kong and Macau respectively. In 2014, China signed comprehensive revised tax agreements with Germany and Russia; In 2015, China signed tax agreements and protocols with Chile, Zimbabwe, Russia, and Indonesia; In 2016, China signed tax agreements and protocols with Romania, Poland, Malaysia, Cambodia, Pakistan, and others. Over the past three years, China has signed 16 tax agreements (including protocols) with 13 countries and regions.

The role of tax treaties in enterprises' "going global" mainly has two aspects. On the one hand, it is necessary to avoid double payment of income tax on the same income in China and the investing country. On the other hand, it is possible to resolve overseas tax disputes through mutual negotiation procedures in accordance with tax agreements. From the implementation of these agreements, it can be seen that these agreements have reduced the overseas tax burden for Chinese 'going global' enterprises and improved their competitiveness overseas. "Wang Bingming explained.

Tax treaties limit their right to tax in accordance with domestic tax laws by reducing the tax rate of the source country of income or raising the tax threshold, while also providing tax credits for overseas taxable income in the resident country, thereby achieving the goal of avoiding double taxation for both contracting parties

How to offset relevant taxes? Wang Bingming introduced that according to current tax laws and regulations, resident enterprises in China should pay corporate income tax on their income from sources within and outside China. Therefore, enterprises face the possibility of being double taxed by both the resident and source countries. In order to avoid this issue, China's corporate income tax law further stipulates that resident enterprises' taxable income from sources outside of China that have already been paid overseas can be offset domestically according to regulations, known as "overseas income tax credit".

According to relevant regulations, income tax that should not be paid overseas according to tax treaties is not within the scope of credit. Therefore, if an enterprise obtains income from a country that has already signed a tax treaty and needs to pay income tax in the source country, it should apply for tax treaty treatment locally. Otherwise, income tax overpaid in the source country due to not enjoying tax treaty treatment cannot be offset domestically.

He gave an example, assuming that a Chinese enterprise invests and holds equity in A country, A country enterprise distributes a dividend of 1 million yuan to the Chinese enterprise. According to the domestic tax laws of Country A, a 15% withholding income tax is imposed on dividends paid to non resident enterprises. However, according to bilateral tax agreements, for dividends paid to tax resident enterprises in China, the tax imposed by the tax authorities of Country A should not exceed 5% of the total dividend amount. Therefore, resident enterprises in China can propose to the tax authorities of Country A to pay tax at a tax rate of 5% in accordance with the tax agreement, that is, to pay income tax of 50000 yuan in Country A, which can be included in the scope of tax credit in China. However, if Chinese resident enterprises do not claim treaty benefits in Russia and pay 150000 yuan of income tax in accordance with local tax laws, then an additional 100000 yuan of tax stipulated in the agreement cannot be offset in China.