An Analysis Of Multinational Corporations' Tax Avoidance

Taxation planning is an important way for multi-national companies (MNC) tosave money. It's certainly necessary to acquaint ourselves with multi-nationalcompanies' taxation burden first, and then figure out the advantages anddisadvantages from different countries' tax systems, to provide evidence formulti-national companies' investment and management strategies. The advantagesinclude Tax havens, the existence of international tax treaty networks and favorabletax laws or policies of every countries; And the disadvantages always refer toanti-avoidance of tax, include transfer pricing law, capital weakening law, force ofattraction principle, and so on.There are many methods of international tax avoidance for Multi-nationalcompanies, among which the most important one is the offshore companies. Taxavoidance with the off-shore companies has been adopted by many well-knownmulti-national corporations. Taking advantage of off-shore companies, transfer pricingand international taxation treaty, multi-national corporations can avoid or reduce thewithholding tax levied on incomes from interests, dividends and royalties, and bytransferring the incomes to the tax havens, and distributing the profits or reinvestingthere, the taxation can be avoided or delayed. This thesis will first concretely describethe frame which Multi-national companies use to avoid tax with tax havens andinternational tax treaty networks, and then deeply analyze the tax benefit brought bythe transfer pricing among affiliated enterprises, here it meanly concentrates on income tax, withholding tax, tariff and value-added tax. Besides, other benefitsbrought by offshore companies will also be stated. At last, take Shanda Entertainmentas an example, the taxes are avoided through registering offshore companies inCaman and BVI. Then a general statement is presented as how to avoid tax byoffshore companies.