What Is Tax Equity?

The principle of tax rights and interests is one of the important principles of taxation.

Tax equity

Right!

The principle of tax rights and interests is one of the important principles of taxation.

Chinese name

Tax equity

Subject

economic

Nature

in principle

Content

Principle of independence

Definition of Tax Equity Principles

Sovereign content of the principle of tax rights

Taxation autonomy is a sovereign aspect of national rights and interests. The sovereign content of the principle of tax rights includes three aspects:

The first is independent taxation rights. One of the basic principles of international law is to respect each other's sovereignty, including autonomously determining the country's internal affairs, diplomacy, and taxation power. This tax autonomy is determined by the constitution of one country and is not controlled by other countries.

The second is autonomous taxation rights. In order to promote foreign economic development on the basis of equality and mutual benefit, and protect their national interests and national economy, sovereign states have the right to negotiate and sign various tax agreements between countries in accordance with the principle of reciprocity to decide whether to give each other preferential tax treatment.

The third is to autonomously choose tax jurisdiction. In accordance with the principles of territorialism and personalism prevailing internationally, tax jurisdiction can be divided into territorial jurisdiction (source income jurisdiction) and resident (citizen) jurisdiction.

Governments are free to choose and exercise one or both of the above-mentioned tax jurisdictions, determine the scope of their governments' taxing rights, and resolve international double taxation issues through unilateral or bilateral measures. The People's Republic of China has always adhered to the principle of tax rights. By the end of 1993, the National People's Congress and its Standing Committee had promulgated and implemented foreign-related tax laws such as the "Law on Income Tax on Foreign-Invested Enterprises and Foreign Enterprises," and China had signed relevant tax and trade reciprocity agreements with most countries in the world, one after another 34 countries have signed agreements to avoid double taxation.