The Prospect of New Partnership Taxation in China

10 Pages Posted: 18 Jan 2009 Last revised: 8 Jun 2020

See all articles by Wei Cui

Wei Cui

University of British Columbia (UBC), Faculty of Law

Date Written: May 7, 2007

Abstract

China's revised Partnership Law requires the government to tax partners but not partnerships. Previous partnership tax rules applied only to partnerships with individual partners, and suffered from major flaws, the most important of which is that the character of income received by a partnership is not completely preserved when allocated to the partners, with the result that individual partners are overtaxed on both labor and investment income. In other words, there was no true flow-through taxation. The paper recommends improving the flow-through treatment of income, but argues that because Chinese partnerships are unlikely to be prepared in the short-term to maintain capital accounts, the flow-through treatment of losses should be postponed. In addition, partnership tax accounting should begin deploying the concept of outside basis.

Keywords: Chinese taxation, partnership tax

JEL Classification: K34

Suggested Citation

Cui, Wei, The Prospect of New Partnership Taxation in China (May 7, 2007). Tax Notes International, Vol. 46, No. 6, 2007, Available at SSRN: https://ssrn.com/abstract=1329246

Wei Cui (Contact Author)

University of British Columbia (UBC), Faculty of Law ( email )

1822 East Mall
Vancouver, BC V6T1Z1
Canada

HOME PAGE: http://https://allard.ubc.ca/about-us/our-people/wei-cui

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