Abstract

Among the different approaches to comparative tax law the one adopted here views comparative taxation as a descriptive tool conducive to tax design, a tax policy approach grounded in an evolutionary concept of tax change. Comparative taxation should be based on the functions of tax rules, with the goal of identifying similarities and differences between domestic tax systems, and should indicate potential alternative solutions to common policy issues by looking at how the basic elements of tax law-in-action interact. The Article develops a theoretical framework for comparative tax research and uses examples drawn from a comparative study on the General Anti-Avoidance Rule in Canada and China, thus endeavouring to provide a crosscultural inquiry into tax transplants across the divide of Western and non-Western legal traditions. It is claimed here that a common model of tax systems should be adopted for the purpose of comparing them, and that legal theory is needed to pursue this task. The use of legal theory as a critique of municipal tax ideas is discussed in Part I, while Parts II and III deal with how legal theory can be used to describe the structure and evolution of tax systems by relying on concepts of legal hierarchies and chains of productions of tax rules. Part IV concludes with practical applications of legal theory in comparative tax research in respect to tax transplants and tax design issues by providing an explanatory framework of General Anti-Avoidance Rules in Canada and China.