Dispute resolution refers to the handling and resolution of disagreements or conflicts between parties through certain methods and procedures. Tax dispute resolution refers to the handling of disagreements or conflicts on tax issues between taxpayers, withholding agents and tax authorities, or the settlement of relevant disputes through negotiation by the competent authorities in cases where the measures taken by one party that has concluded a double taxation agreement have resulted or will result in the levy of taxes that are not in accordance with the provisions of the agreement. Common methods of resolution include reducing potential disputes between tax authorities and enterprises, tax administrative reconsideration, tax administrative lawsuit, Mutual Agreement Procedure for cross-border tax disputes and Advance Pricing Arrangement.

Reducing potential disputes between tax authorities and enterprises refers to the prevention and reduction of possible disagreements, conflicts and disputes between tax authorities and enterprises through a series of measures and methods. Tax disputes between enterprises and tax authorities typically arise from different interpretations of tax laws and regulations, ambiguous policy application, the exercise of discretionary power by tax authorities in law enforcement, or insufficient tax compliance awareness among enterprises. Reducing potential tax disputes holds significant importance. For enterprises, it mitigates tax risks, avoids financial losses and reputational damage caused by disputes, and safeguards normal operations and sustainable growth. For tax authorities, it enhances tax administration efficiency, reduces administrative costs, maintains tax administration order, and strengthens the public credibility of tax authorities.

Tax administrative reconsideration is a legal remedy mechanism that taxpayers apply to the upper-level tax authorities for re-examination and correction of specific administrative acts (tax collection acts, administrative penalties, tax conservancy, etc.) in accordance with the law when they do not agree with the specific administrative acts made by the tax authorities. Its core function is to safeguard taxpayers' lawful rights and interests and maintain tax fairness through internal administrative supervision. This system offers strong expertise, high efficiency, and low costs, with most disputes being resolved at the reconsideration stage. Taxpayers dissatisfied with the reconsideration results may initiate administrative lawsuit in accordance with the law. The design of administrative reconsideration prior to lawsuit both alleviates judicial pressure and promotes self-correction within tax authorities, effectively advancing the construction of a tax law-based framework.

Tax administrative lawsuit is a judicial remedy procedure initiated by taxpayers, withholding agents and other administrative counterparts to the courts in accordance with the law when they do not agree with the specific administrative acts or reconsideration decisions made by the tax authorities. Its core function is to supervise tax authorities' lawful administration, safeguard taxpayers' rights, and achieve definitive resolution of tax disputes through judicial review. By ensuring judicial neutrality, tax administrative lawsuit guarantees impartial adjudication and embodies the judiciary's effective constraint on administrative power. Compared with administrative reconsideration, administrative lawsuit-though more time-consuming-carries enforceability and finality though it is more time-consuming. Through the accumulation of judicial precedents, it drives the refinement of tax policies and promotes systematic optimization of the tax rule of law from procedural to substantive aspects, serving as the "final safeguard" for protecting taxpayers' rights and interests.

In order to resolve problems regarding the interpretation and application of tax treaties, prevent or correct taxation measures in violation of treaty provisions, ensure the effective and consistent implementation of tax treaties, and effectively avoid double taxation, tax treaties provide for an international coordination mechanism for resolving cross-border tax disputes, i.e. the mutual agreement procedure. This mechanism encompasses two types of procedures: mutual agreement procedure for the interpretation and application of tax treaties, and mutual agreement procedure for transfer pricing.

In accordance with the relevant provisions of tax treaties, the competent authorities of the contracting jurisdictions shall jointly address the issues relating to the interpretation and application of tax treaties through consultation.

In accordance with the relevant provisions of tax treaties, the competent authorities of the contracting jurisdictions shall jointly address cross-border tax disputes arising from transfer pricing investigation and adjustment through consultation.

In accordance with the relevant provisions of tax treaties signed with other jurisdictions and relevant domestic laws and regulations, upon the application of taxpayers, competent authorities of the contracting jurisdictions shall try to reach agreements through consultation regarding the pricing principle and calculation method for the related transactions between multinational enterprises on the basis of the arm's length principle. Such agreements may apply to future years and may also be applied retroactively to past years. Depending on the number of participating tax authorities, advance pricing arrangements can be categorized into three types: unilateral, bilateral, and multilateral.

[Tax Administration Product No.12: Reducing and Resolving Tax Disputes] (to be released in 2028)