Chinese companies in tax havens.

This article examines the tax residence positions of the largest 79 Chinese multinational enterprises (MNEs) with tax-haven-incorporated parent companies listed on major US stock exchanges, finding that all report they are not Chinese resident enterprises (REs) for tax purposes despite having substantial operations and management in China. This non-RE status provides significant tax advantages at both corporate and shareholder levels by enabling these MNEs to accumulate untaxed profits offshore and reduce Chinese tax exposure. The article further analyzes the expected impact of the global minimum tax reform, concluding that while this reform may reduce some tax benefits, it will not eliminate the advantages of non-RE status because China cannot apply primary top-up taxes to non-RE parent entities and may rely on secondary rules like the Undertaxed Profits Rule (UTPR), which may be limited in scope. Overall, the findings suggest that Chinese tax policy currently facilitates offshore tax planning by MNEs, with implications for their international competitiveness and the effectiveness of global tax reforms.