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Jieyin, Tang --- "Principle or exception: rethinking economic substance as a general principle to tax financial transactions" [2015] ELECD 572; in Shi, Jichun (ed), "Renmin Chinese Law Review" (Edward Elgar Publishing, 2015) 64

Book Title: Renmin Chinese Law Review

Editor(s): Shi, Jichun

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781784715809

Section: Chapter 3

Section Title: Principle or exception: rethinking economic substance as a general principle to tax financial transactions

Author(s): Jieyin, Tang

Number of pages: 28

Abstract/Description:

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.