On Chinese Advance Pricing Arrangements

With the rapid development of economic globalization, vector of economic globalization—transnational corporations play an increasingly important role in the world economy. On a global scale the way through the rational allocation of resources to achieve their goals of maximizing benefits can be achieved. The rational allocation of resources of transnational corporations means the transfer of wealth and benefits. Through transfer pricing within the framework of the global allocation of resources has been become the major form of multinational corporations to pursue their maximum benefits. Moreover, it has also been incorporated into national government regulation and adjustment range.Comparison in terms of the form of tax avoidance for the multinational companies, the traditional tax system primarily makes use of post-audit as a tool to adjust and regulate. This post-audit has a certain inhibition and normative role, but there are many drawbacks. On the one hand, national laws and regulations on transfer pricing are increasingly stringent and complex, processing time of the tax authorities also gradually lengthened. This has a great adverse effect for both taxpayers and tax authorities to carry out their business, which increased the burden on both sides. On the other hand, it is inevitable that there is a certain difference between the national laws and regulations of different countries on transfer pricing. And this difference led to inevitable international double taxation and international controversy. Therefore, in order to make the relationship between the taxpayers and tax authorities tend to harmony, the new adjustment method APA, which is more acceptable for both sides, came into being.Since 1998, our first introduction of advance pricing system as a transfer pricing adjustment methods, it is only about ten years. However, after these 10 years of continuous development, our China's Advanced Pricing System in both legislation and practice has made great achievements. In particular, the promulgation of the "PRC Enterprise Income Tax Law" in 2008 and "Special Tax Adjustments Implementation Methods (for Trial Implementation)" in January 2009 means the development of our country's advance pricing system reaches new heights. At the same time, we also have to admit that in China's advance pricing system, there are still many deficiencies. This article will discuss these shortcomings, and put forward my own proposals of the development and improvement of China's APA system through comparison with the advanced experience of foreign study.In addition to Introduction and Conclusions of this paper, the main is divided into four parts.Introduction mainly describes the background and significance of this paper, as well as domestic and foreign research and evaluation of the status quo. The first chapter discusses the related theory of APA and its resulting source of the legal nature and legal basis.The second chapter analyses the legislation and practice in the status quo of our advance pricing system, and on this basis, points out the major problems of our APA system.The third chapter compares the APA system of the United States, Japan and Australia, and summarized for our reference in common.The fourth chapter combines with the new introduction of "The People's Republic of China Enterprise Income Tax Law" and "Special Tax Adjustments Implementation Methods (for Trial Implementation)", makes comprehensive proposals of China's APA system.