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Study On Legal Control Of Multinational Affiliated Enterprise's Transfer Pricing

Posted on:2009-01-12Degree:MasterType:Thesis
Country:ChinaCandidate:B HuFull Text:PDF
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Transfer price is the price between multinational enterprises or affiliated enterprises. Transfer pricing is used to describe arrangements involving the transfer of goods or services, at an artificial price, in order to transfer income or expenses from one enterprise to an associated enterprise. With the globalization of the world economy, the world economy stride forward to internationalization and integration continuously , multinational investment has become a common economic phenomenon. As one method of tax avoidance , transfer pricing is the most important and most general means of tax avoidance, and has developed into many forms and modes. With the rapid development of multinational enterprises, transfer pricing is and continues to be one of the most important international legal and economic issue facing MNEs, and constitutes to be one of the major challenge to the tax authorities of each country. On objective conditions, tax jurisdictions of various countries and areas , difference of tax rate and tax items, vacancy of the mutual agreement and information exchange,and tax shelter provide conditions for transfer pricing. From the view of those enterprises ,they face several tax jurisdictions, various bilateral and multilateral tax agreement, different tax rate tax preferential measures, for the target of maximization of enterprise value and profit, by means of distribution internal resources between affiliated enterprises to minimize tax burden. Be the important tool in internal finance management and the important way to achieve its strategic goal, transfer pricing may have many motives, but it use the non-normal transaction price deviation from market , causes tax avoidance in fact, effects tax income of specific nation or area, violates the principle of fair tax ,so it must be regulate by nation. In the Course of Reform and Opening Up, as the start of our "bring in" and "go global" strategies, more and more multinational enterprises come up in our country,these enterprises has a great contribution to the economic,at the same time ,they use transfer pricing to attain the expected purpose. For avoiding tax evasion between multinational affiliated enterprises, maintaining legitimate tax rights and interests, establishing fair and competitive market system, establishment of complete and effective legal standard is necessary. Therefore, we must correctly evaluate and further improve the current legal system of transfer pricing. This is one of the most important tasks of our country. Now, Arm's length principle is adopted by many coutries and areas in the world. Represented by OECD's Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations .This paper, on the base of definition of affiliated enterprises, multinational enterprises and transfer pricing, summarizes the motivations, kinds and influences of transfer pricing, review and make detailed analysis of the principles (Arm's length principle) and methods (Comparable Uncontrolled Price Method, Resale Price Method, Cost Plus Method, Transactional Net Margin Method, Profit Split Method)of transfer pricing regime, Make comparative analysis for foreign transfer pricing regime, survey and study on the current legal system of transfer pricing in our country, introduces advanced pricing agreement and related domestic foreign legislation briefly, and describes the trend of transfer pricing regime. The core viewpoint of this paper is that , Arm's length principle will continue to be the basic principle of market economy system which is characteristic of competition and fair.
Keywords/Search Tags:transfer pricing, multinational enterprises, affiliated enterprises, tax avoidance
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