Research On Tax System Of Transfer Pricing

With the development of economic incorporation and trade globalization, Multinational Corporations have gradually become important tax resource in every country. However more and more MNCs take up transfer pricing to avoid tax duty, which has caused great loss to every tax authorities. Since 1970's, western countries have already made transfer pricing tax system to regulate MNCs'transfer pricing actions. Since the reform and opening up, a great deal of foreign direct investment has brought about economic prosperity to China, meanwhile it has also caused problems in tax supervision. The tax system dealing with transfer pricing needs to be developed and perfected.Starting from transfer pricing actions of MNCs, this article analyzes its incentives and implementing modes. With quantitative analysis, it estimates China's tax loss made by MNCs since 2000 to 2004. By a global view, it introduces and compares the main specialties of transfer pricing tax system in different countries, which leads to the latest development of transfer pricing tax system. Based on analyzing traditional transfer pricing adjusting methods, it emphasizes a new adjusting method, advanced pricing agreement(APA). Finally with China's actual situations, it points out problems in existing transfer pricing tax system and proposes countermeasures to perfection.