Tax Avoidance on Intangible Assets by Multinational Corporations in the Context of the Two-Pillar Solution and China's Response Proposal

International trade has entered the digital economy era due to the sector's rapid development. In order to avoid paying taxes on a global scale, multinational corporations use loopholes in conventional international tax laws. This severely damages the tax bases of many nations, results in significant financial losses, and undermines the fairness of international taxation. Various reform initiatives have developed to address the tax difficulties posed by economic digitalization. The OECD has introduced two significant solutions based on the BEPS action plan, collectively referred to as the "Two-Pillar" solution, to address the issues of tax base erosion caused by the transfer of profits of multinational enterprises and the inability of source countries to tax the profits of certain multinational enterprises in the context of the digital economy. Pillar One breaks through the entity presence rule emphasized in the existing international tax system and redistributes the profits and taxing rights of eligible large multinational enterprises to the market countries to ensure that eligible large multinational enterprises can undertake fairer global tax obligations in the context of economic digitalization. Pillar Two starts from the effective corporate income tax rate and introduces a global minimum tax system to combat the behaviors of multinational enterprises aimed at avoiding tax obligations. China is in favor of promoting the "Two-Pillar" approach as a participant in the OECD "Two-Pillar" declaration, a member of the G20, and the BEPS Inclusive Framework. Facing the new international tax rule system that is about to be implemented, China should be well-prepared in different aspects.