A Study Of The Chinese Anti-Evading Tax System Concerning Multinational Enterprises' Evading Taxes On Transfer Pricing

Transfer pricing (TP for short) is known as the pricing system for intermediate goods which are transferred from one division to another in a multinational enterprise (ME for short). In this paper, it refers to a ME, rather than obey public market pricing rules, sets prices that serve its own objective to evade tax and maximize its total profit in its own favor.Currently, TP is the most preferable method taken by a ME to allocate its incomes and expenses and transfer its profit, which erodes social benefits. Meanwhile, TP has brought about many challenges to each authority' s tax jurisdiction and become the global hard nut to crack. Chinese Anti-Evading Tax System Concerning Multinational Enterprises' Evading Taxes on Transfer Pricing (CATSCMEETTP for short) was appeared in the late 1980s and shows its disability when it deals with tax-evading problems on TP which are getting worse. The establishment of tax system on TP in China is not only benefit the perfection of its international taxation mechanism, but will contribute to its connection with the international convention.Based on the analyses of tax-evading on TP reasons and the present situation about the anti-evading tax system, combining theoretical and practical research, the paper interprets and innovates systematically the main theories of anti-evading tax on TP and its economic effects, such as the theory foundations including equilibrium theory, comparative analysis theory and game theory. According to the conclusions of the international experiences, the paper gives the main idea for the design of CATSCMEETTP.