Under the international tax framework, enterprises can optimize their tax structure through legal and compliance methods, but they need to strictly comply with national tax laws and international anti-avoidance rules (such as BEPS). The following are some common tax planning methods and precautions： --- ###1.**Use the Tax Treaty Network (Tax Treaty Network)** 1. **Intermediate holding company structure** -Set up an intermediate holding company in a low-tax country or region to use the country's extensive tax treaty network to reduce withholding taxes on cross-border dividends, interest, and royalties. For example, countries such as the Netherlands, Singapore, and Luxembourg are often used in such structures because of their tax treaty networks and low withholding taxes. -**Key point**: It is necessary to meet the requirements of “beneficial Owner” to avoid being identified as a “beneficiary company”. 2. **Preferential terms of tax treaties** -Use the terms of the agreement on operating profits, capital gains, etc. to distribute profits to countries with lower tax rates. For example, some agreements provide for taxation only in the country of residence, or limit the tax rate in the country of origin. --- ###2.**Transfer Pricing (Transfer Pricing)** -**Profit segmentation and pricing strategy** Transfer profits to subsidiaries in low-tax countries through intra-group transactions (such as sales of goods, service fees, royalties). It must comply with the ”Arm's Length Principle" and prepare transfer pricing documents (such as main files and local files). -**Risk**: May face adjustments from tax authorities, especially when intangible assets or high-risk transactions are involved. --- ###3. **Cross-border arrangements for intellectual property (IP)** -**Patent Box (Patent Box) system** Holding intellectual property rights in countries that provide IP tax incentives (such as Ireland and the Netherlands), only low tax rates apply to IP-related income. It is necessary to ensure that the development and maintenance activities of IP are substantially related to the location (BEPS Action Plan 5). -**Cost sharing agreement (CSA)**: Share R&D costs and allocate IP ownership to low-tax countries. --- ###4.** Permanent Establishment (PE) Planning** -Through the design of business models (such as avoiding the establishment of fixed locations or dependent agents in high-tax countries), prevent the formation of PE in high-tax countries, so as to retain profits in low-tax countries. -**Note**: The 7th Action Plan of BEPS expands the definition of PE, and it is necessary to carefully assess whether business activities trigger PE risks. --- ###5.**Hybrid Mismatch (Hybrid Mismatch)** -Take advantage of the qualitative differences in taxation of the same entity or instrument in different countries (such as mixed entities, debt/equity classification differences) to achieve double deductions or one party deducts and one party does not tax. However, the second BEPS Action Plan restricts such arrangements. --- ###6. **Tax Resident status Planning** -By adjusting the location of the management, the place where the board of directors is held, or the place of registration, choose a tax resident status that is more beneficial to the enterprise (such as Singapore vs. Hong Kong). It must meet the criteria for the identification of residents of various countries (such as the actual management agency test). --- ###7.**Thin Capitalization and interest deduction** -By increasing the debt ratio of subsidiaries in low-tax countries, use the pre-tax deduction of interest expenses to transfer profits. Capital weakening rules (such as fixed ratio method and group ratio method) must be complied with. --- ###8.**Circumvention of the rules of controlled foreign companies (CFC)** -Keep profits in subsidiaries in low-tax countries, but pay attention to the CFC rules of the country where the parent company is located (such as China and the United States). Some countries allow ”active income" exemptions to ensure that the business meets the requirements of ”substantive activities". --- ###9. **Regional headquarters and shared service center** -Set up regional headquarters or shared service centers in low-tax countries, centralize management functions (such as finance, procurement, IT), and distribute profits through cost addition or profit division. --- ###10.**Digital Service Tax (DST) and Emerging Economy Association Rules** -In view of the digital economy, the first action plan of BEPS proposes the concept of “significant economic existence”, which needs to assess the taxability of digital services in high-tax countries. --- ###**Key points of risk and compliance** 1. **Economic substance requirements**: Most countries (such as the EU's “blacklist” countries) require companies to have substantive business activities (personnel, assets, places) that match their income. 2. **Anti-abuse clause (LOB/PPT)**: The “main purpose test” (PPT) in tax treaties may deny arrangements with the main purpose of tax avoidance. 3. **Information transparency**: Mechanisms such as CRS and CbC reports increase tax transparency, and the tax structure may face stricter scrutiny. 4. **Dispute resolution**: Plan dispute response mechanisms (such as MAP) in advance. --- ###**Summary** The tax optimization of compliance needs to balance commercial substance, legal form and economic rationality. It is recommended to dynamically adjust the structure with the assistance of professional tax consultants in combination with BEPS rules, national domestic laws and multilateral conventions (such as MLI). Do not rely on purely paper arrangements to avoid triggering anti-tax avoidance investigations.