Transfer Pricing And Corporate Tax Planning

Transfer pricing is a way of tax planning which emerges because of the demand of the changing enterprise organization and management structure. At home, tax planning is a new word to most of the enterprises and individuals. Literally,'tax planning'is generalized, which can be understood by comparing different enterprise structures and strategies to find out the best way for tax bearing. With the rapid economical development and the gradually expanding size of the enterprises, both transnational enterprises and group companies are facing the problems that how to make tax planning illegally and how to compress the taxable income by using transfer pricing reasonably. The article will discourse the necessities of using transfer pricing rationally to pay taxes. On the one hand, using transfer pricing can save taxes; on the other hand, intra-family transfer pricing might twist the real profit level among the enterprises, which may cause some unfair elements on the distribution of bonus. What's more, a protruding transfer pricing must meet with the strict check of the inspectors of taxes. That brings the risk of paying taxes. Therefore, how to use transfer pricing rationally and skillfully is very important.The article sets the main target on enterprise transfer pricing. It takes our practical situation and the scope of this article involves enterprise tax planning thorough research into enterprise tax planning, developing a systematic, perspective of financial management and accounting. There are four parts.The first section is the introduction part, which analyzes the current situations of tax planning at home and abroad. It indicates the important meaning on the research of tax planning. It clarifies the researching method and angle. It emphasizes that we should do the research from the view of the enterprises, financial management and accounting. It states the innovative points and the framework of the whole article.The second section is a summary of transfer pricing. It introduces the origin and definition of transfer pricing, and it introduces the definition of affiliated enterprise. The third section introduces enterprise tax planning. It clarifies the concept of enterprise tax planning, which thinks enterprise tax planning refers to a group of activities. Enterprise tax planning can help reduce the tax amount or, by redefining the tax basis, tax rate and taxable amount, delay the payment time of the tax with the goal of earning time value. The author also discusses the implication of taxation burden, indicators of measurement, explicit tax and implicit tax, and the judgment principles of tax. It analyzes the tax motivation of transfer pricing. There is a western saying: there are two things cannot be avoided by anybody, death and paying taxes. It has the same sense both for individuals and enterprises. Modern tax paying has deepened into all the suspects on economic and social life. And it affects enterprise profit, becoming an important element while making business decision. With market economy situation, enterprise, as a separate legal entity, sets the aim at meeting maximum economic profit rationally and illegally. Tax planning is a basic right for a tax payer. Therefore, the person who refuses to pay tax is a barbarian, who evades paying taxes is ignorant and silly. The person who makes tax planning is wise.The forth section analyzes the current transfer pricing, raising concrete and improving proposals according to the abuse of transfer pricing.