The Dilemma and Solution of the Multilateral Legal Framework of International Taxation

To avoid double taxation is the basic purpose of the current international tax system. Therefore, an international tax system with bilateral tax treaties as the main form has been formed among states. However, practice has proved that the inherent defects of the international tax system, which is dominated by bilateral tax treaties, have resulted in the problems of tax base erosion and profit transfer. G20 and OECD have led the introduction of Multilateral Convention on the Implementation of Relevant Measures of Tax Treaties to Prevent Tax Base Erosion and Profit Transfer (hereinafter referred to as “BEPS Convention”), to which China has also acceded. However, the above BEPS convention is called “Convention”. In fact, it is only a modification of some provisions of existing bilateral tax treaties of various countries. In essence, it does not have the function of multilateral tax treaty, but only takes the form of multilateral agreements for the continuation of bilateral tax treaties. The author thinks that in order to solve the problems of tax base erosion and profit transfer, we should change the structure of tax benefit distribution under the traditional benefit principle that “tax on positive income in source areas and tax on negative income in residential areas” and build a new multilateral tax treaty system that “tax on positive income in residential areas and tax on negative income in source areas”.