Application Of Transfer Pricing And Foreign Ownership In China

Rapid development in the social and economic global expansion today, multinational corporations, as the organizers of a world economy, the use of its international production and sales in a favorable position for the tax system among countries, the different foreign tax laws, through the species of the so-called legal means possible to reduce the company's revenue, in the best interest. The most common method of evading taxes is the use of transfer pricing, in view of this, every country acts for the establishment of such a transfer pricing tax corresponding to prevent multinational corporations to evade taxes through transfer pricing.Since the reform and opening up of China, more and more in-depth economic reform, Chinese enterprises out of China, while foreign-controlled enterprises operating in China, these funds into the enterprise has brought advanced management concepts, human resources, technical support, to make up China's reform and opening up the many deficiencies; However, these multinational holding companies use pre-reform and opening up the legal system is not perfect, by the improper transfer pricing to reap large interests in China, making China the company suffered heavy losses, while state tax revenue into the overseas. The Chinese government in 1991, this inappropriate for the interests of foreign investors and established a tax system seek to avoid tax outflows, however, due to various reasons, there are some loopholes in the law, and still in its infancy compared to developed countries, therefore, the Chinese Government is to learn the advanced experience and improve their own tax system, effective to prevent foreign companies or controlling shareholders seek improper interests by transfer pricing, which is facing the construction of revenue laws is an important project.In this paper, firstly, analyzing the current China investment holding company status, the current foreign holding enterprises invested in China's main features, based on actual case studies of enterprises in China holding so-called "successive loss" was the reason, many foreign losses is false, tax evasion is True. To cope with such a "loss of some foreign companies through incremental reduction, transfer pricing of goods, cost of various means of making a false report, to achieve the realization of the objective. We must all be vigilant in the strange phenomenon of foreign capital to "Forced" improving our market monitoring mechanism, through institutional building and strict law enforcement approach to foreign tame them, moral up, restore their good quality, and bring them China's land release, infection, and assimilation of domestic capital. Second, the Chinese government has formulated a transfer pricing tax system, through transfer pricing tax adjustments necessary standard, from the analysis point of view, China's current transfer pricing system, there are many issues to holding companies in China an opportunity to. Finally, on this basis, given China's current stage of economic development and China's basic national conditions, China put forward for use against foreign-controlled transfer pricing tax evasion strategies.From the business point of view, to achieve a reasonable corporate tax for the purpose of the strategic use of transfer pricing tax saving ideas, through the combination of theoretical and empirical research methods to analyze foreign investment in China, holding company of various aspects of tax-related issues. Scientific and comprehensive manner to provide a tax saving ideas and methods are Designed for enterprise mergers and acquisitions activity in the legal.