Reviewed by Kim Brooks, Canadian Tax Journal/Revue Fiscale Canadienne Vol. 65, No. 2 (2017), pp. 541-542
Jinyan Li has a phenomenal capacity to produce high-quality, engaging research on a cross-section of international and comparative tax law subjects that speaks to tax lawyers, policy makers, students, and academics. This work adds to the long list of her contributions to research.
The book focuses on China’s enterprise income tax and its tax treaties. For tax practitioners with clients doing business in China, the book has lots to offer. It begins with a detailed review of the enterprise income tax law as a policy instrument (chapter 2) and of its doctrinal application in an international context (chapter 3).
Chapters 4 and 5 feature an examination of China’s tax treaties. Li offers an overview both of China’s approach to the design of its tax treaty network and of its approach to tax treaty interpretation. She examines the courts’ decisions in PanAm-Sat1 and Donghwa,2 the first tax treaty cases. She also undertakes an article-by-article review of China’s tax treaties, almost constructing a “Chinese tax treaty model” by implication.
Chapters 6 through 11 explain China’s tax law as it applies to non-resident companies doing business in China (chapter 6), non-resident companies investing in China (chapter 7), peculiarities for foreign-invested companies and partnerships (chapter 8), resident companies investing overseas (chapter 9), transfer pricing (chapter 10), and the general anti-avoidance rule (GAAR) along with the base erosion and profit shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD) (chapter 11). The design and style of this book mirror those of Li’s excellent text (co-authored with Arthur Cockfield and Scott Wilkie) International Taxation in Canada.3
As well as being attractive to practitioners and a welcome departure from the standard doctrinal review of the law, Li’s book contributes to our understanding of comparative tax law and tax culture. The scholarship on legal transplants has exploded since Alan Watson’s influential 1974 book.4 Li reveals herself to be among those scholars who believe that law has a “common core,” and she believes that the common core of the taxation of international enterprise activity can be discerned in China’s legal framework. At the same time, she seeks to reveal the local context (or culture) that influences the way that international taxation in China is drafted, applied, and interpreted by its tax administration (the State Administration of Taxation) and, to a lesser extent (since there are only four international cases), by its courts. Her work exposes the substantial gap in China between the law on the books and the law in action.
Although its connection to the comparative law literature gives weight to Li’s analysis, the book’s main thrust is not to advance a theory of comparative tax law, to offer comparative insights explicitly, or to evaluate the efficacy of China’s policy choices. Li leaves those aims for future projects. This book is a foundational text that will provide critical support for later work, and it is a wonderful guide for those with an interest in how tax law and its application and interpretation are evolving in China.
1 PamAmSat v. Beijing State Tax Bureau, 2001.
2 Donghwa Industrial Corporation v. Weihai Huancui State Tax Bureau, Weihaun Xingchuzi, , no. 31.
3 Jinyan Li, Arthur Cockfield and J. Scott Wilkie, International Taxation in Canada: Principles and Practices, 3rd ed. (Markham, ON: LexisNexis Canada, 2014).
4 Alan Watson, Legal Transplants: An Approach to Comparative Law (Edinburgh: Scottish Academic Press, 1974).