Research On The Advance Pricing Arrangements

With the speedup of the globalization process, transactions within associated company have developed dramatically and subsequently triggered more and more taxpayers' tax avoidance activities.To cope with the problems, many countries had established their Transfer Pricing System(TPS).However, the traditional solution of TPS is an afterwards adjustment method and it has many flaws such as high-efficiency and low- cost etc.Advance Pricing Arrangements (APA),which is a pre-confirmation solution, has become an effective way to resolve traditional problems of TPSThrough 20 -years development of practice, APA has been proved positive and innovative in dealing with a series of issues of TPS. Under the Taxation system of APA,it focuses on cooperation between relevant parties to solve tax disputes between counties,which is in a non-resisting way. Obviously,it is valuable in both theoretic and practice to get a long-term win-win situation for tax authority and payers. Among many countries that have established their APA systems, US and Japan are the most maneuverable one and represents the fastest development speed in the world. APA's rapid development has attracted the attention of OECD,which makes the APA rules and had provide a framework of APA.China has a short history of APA application which with few practice and inadequate legislation. Based on accumulated APA practice from the other country's, China should learn from US, Japan and OECD for reference. In the legislation area. China should do a lot more such as to perfect the information security system and the transfer pricing methods, to add critical assumptions in order to enhanced operability of APA. In the practice area, China should improve the level of tax collection and set up a centralized APA manage mode; accelerate the APA application especially the bilateral APAs; Supplementary Provisions of the taxpayer's burden of proof, expand the sources of information and establish a uniform APA database. It is certain that the APA system of our country will constantly improved though our own practice and from the other country's advanced experiences.