A Study On Transfer Pricing For Taiwanese Multinaional Enterprises

In order to have the best taxation purposes, the management strategies for multinaional enterprises are using the differences between tax system and tax rate in different countries to arrange the income, the cost and the expenses in profitable balance. Under such circumstance, the income of the international enterprises are twisted, even more the tax bases in different countries are invaded. It is now reasonable to have the regarding regulations on transfer pricing for countries to keep reasonable profits in domestic market.The Taiwan Ministry of finance promulgated the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's Length Transfer Pricing on December 28, 2004 and takes it into action on January 1^st, 2005. Obviously, Taiwan is seriously care about the regarding issues.The methodology of this study is to understand the follow up of the regulations of transfer pricing between the semi-product and the finished product for the cased multinaional enterprises in international investments. Besides, this study not only try to certify the set up a regular range of normal business but also try to compare the principles between controlled business and normal business. The methodology is according to the databases of Taiwan and foreign countries and tries to find comparable objects in the classified controlled business for international investments.Because all the judges from the cased international enterprise are involving in the analysis of industry and market, function and risk, proper transfer pricing and comparable choices. It is so difficult for the tax agent to get a conclusion when checking the matters of transfer pricing in cased enterprise. Sometimes, the tax agent has to accept the analyses and conclusions from the enterprise without any other opinions. So we would like to suggest that the international enterprise should knows well about the demands and contents from transfer pricing regulations and realize the practice of the tax agent in different countries. Even more they should have film policies in normal business principle when meeting the transfer pricing matters. For the controlled business, they should have detailed records keeping system so that when meeting the practice of tax agents in different countries they can provide reasonable record files as useful evidences.