A Study On The Legal Control Of The International Associated Enterprises

Transfer pricing is important in the finance management and is an important tool to achieve its strategic goal inside the transnational associated enterprise. It is also the most important means of tax evasion. Transfer pricing tax system is a legal framework based on tax consideration to adjust transfer pricing in associated enterprises in order to prevent tax evasion between associated enterprises in transnational corporation. It is the fundamental institution to protect our economical benenfits and maintain fair competition. With the deepening reform and opening and accession to the WTO, foreign investors take advantage of transfer pricing to evade tax payment and divert profit, resulting in the loss of tax revenue and disorder of market system. Therefore, it is a significant task for the building of our country s tax system to assess the transfer pricing tax system objectively in China and make it consummate.This article deals with the problem of the international associated enterprises and the transfer-pricing system, and discusses the principles such as arm's length principle, comparability principle and normal deal principle. The writer introduces some main manner of the transfer-pricing, they are comparable uncontrolled price method, cose plus mark up, profit split method and transactional profit method. On the basis of those problems, the writer do the research on the international transfer-pricing system, and the writer wants to give some help to the improvement of the system. Form reform and opening, enterprises with foreign investment and foreign enterprises had rapid development in China, and comes the problems of the transfer-pricing between this enterprises and their associated enterprises. In the end of 70~th of last century, we did not make a rule to the problems in the beginning of the reform. By using the foreign experience, we began to make rules about the transfer-pricing system of the associated enterprises in the 90th. But this rules are all in general terms and is hard to operate actually. With the development of the international economic in the world, many new problems appeared in the system of transfer-pricing system, but we also did not took steps to these problems. In thetransfer-pricing system, the western countries have a long history and accumulate some experience. The OECD also made much account of the transfer-pricing problems in the last years. The OECD published and revised the guidance of the transfer-pricing system. We can use the experience of their system and establish our own system by combining our reality.Because of the transfer-pricing is a practical problem, it is not only the components of the tax law in a country, but also is relative with the financial and accounting system. There are a lot of financial and accounting terms, but the writer do not give a detailed explanation because of the limitation of the length, here I want your understanding.