Legal Interpretation of Tax Law: China

Abstract

This report reviews existing law on the legal interpretation, and depicts the tax system in China with a special emphasis on the legislation of tax law and the historical background of the devolution of legislative powers. Based on the statistical analysis of tax judicial cases during 1998 and 2011, it tries to explore reasons behind the paucity of tax litigation from cultural, legislative, institutional and political perspectives. It also explores the role of administrative organs in the interpretation of tax law in China, illustrating how they act as the leading force in shaping new directions for tax law and interpretation. After the question on who is interpreting tax law is adequately addressed, the article moves to the core issue on how tax law is interpreted in real life. It provides general remarks on four issues, namely the interrelation between judicial interpretation and administrative interpretation, the interrelation between the SAT and local tax agencies on the interpretation of tax law, the interpretation of double tax treaties and the interpretation of anti-avoidance rules. Section 4.07 examines four concrete examples including judicial cases and administrative rulings as illustrations. The last part provides a brief summary.