Renmin Chinese Law Review
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Renmin Chinese Law Review

Selected Papers of The Jurist (法学家), Volume 3

Edited by Jichun Shi

Renmin Chinese Law Review, Volume 3 is the third work in a series of annual volumes on contemporary Chinese law, which bring together the work of recognized scholars from China, offering a window on current legal research in China. This book reflects the study of Chinese law and the reality of Chinese legality and society. Chapters address the developments of the Committee of Politics and Law of CPC, the new challenges China faces in anti-terrorism, the emerging P2P lending in China and the legislation of virtual property inheritance.
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Chapter 3: Principle or exception: rethinking economic substance as a general principle to tax financial transactions

Tang Jieyin


In the financial world, it is believed to be necessary to tax financial transactions based on economic substance rather than legal form, because financial equivalence permits one category of asset to be replicated using others. However_ form can be ignored according to economic substance doctrine as a judicial method to fight for tax avoidance only when the transaction has no business purpose and/or no economic substance. But not all financial transactions can be treated as tax avoidances. There is no reason to tax all financial transactions based on their economic substance, while only tax-avoidance transactions involving tangible assets are taxed according to their economic substance, because the two of them can be interchanged into each other. There does not exist a substantial difference between financial and non-financial transactions when the economic substance doctrine applies.

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