Discussion On The Advance Pricing Arrangement

Tax avoidance is an international hazard, and our country also suffers from this. According to statistics, the tax loss from tax avoidance of the multinational companies in China reaches 30 billion RMB each year. Traditionally, many countries adjust the transfer pricing in the related transactions of multinational companies mainly with the principle of independent transaction and adopt the methods of Comparable Uncontrolled Pricing and Resale Pricing. However,this method does not achieve the desired effect but leads to the waste of manpower and material resources and also the tension between enterprises and tax authorities. Therefore, some countries turn to Advance Pricing Arrangement, which is generally welcomed for its obvious advantages of advance adjust. Advance Pricing Arrangement has made tremendous development in terms of both legislation and practice since it was took as one of the adjusting methods in our country. What brings it to a new level of development is the issue of the Enterprise Income Tax Law of the People's Republic of China in 2008 and the Implementation measures of Special Tax Adjustments (Provisional) in January 2009. However, as a new-born system of only twenty years, Advance Pricing Arrangement still remains much to improve concerning the mechanism establishment. This article is an attempt to discuss and explore some useful suggestions for the Advance Pricing Arrangement.This article consists of three parts: preface, text and conclusion.The preface tells about the topic-choosing background, significance, research synthesis and evaluation and also the study method, innovation and deficiency.The text is divided into four chapters. The Chapter One analysis the jurisprudential basis of the Advance Pricing Arrangement, which points out the three bases including the debt nature of the tax laws, contract theory and the fit between tax law principles and Advance Pricing Arrangement.The Chapter Two focuses on the International Comparison of Advance Pricing Arrangement. It gives a brief introduction of the development of Advance Pricing Arrangement in America, Japan and Australia in an attempt to explore some common disciplines for our use.The Chapter Three analysis the legislative status and practice of the Advance Pricing Arrangement in our country and also points out the block for its development.The Chapter Four presents some ideas and suggestions for the improvement of Advance Pricing Arrangement in China in combination with the Enterprise Income Tax Law of the People's Republic of China and the Implementation measures of Special Tax Adjustments (Provisional).The conclusion points out that our country should utilize the advanced experience from abroad based on national conditions, strengthen the theoretical study and guide the legislation and practice of Advance Pricing Arrangement with contract theory and the principle of equality in order to improve the Advance Pricing Arrangement .