The Study Of Transfer Pricing Behavior Of Multinational Corporations In China

After World War II, one of remarkable characteristics of the contemporary international economy is that a large amount of multinational corporations emerged and played an increasingly important role. Since reform and opening-up, especially after entering the WTO, with the further opening of Chinese market, China made great progress in absorbing the foreign investments, more and more multinational corporations pour into our country in various kinds of forms, such as individual proprietorship, joint-venture, cooperation, branch, etc.. Though the forms differ, multinational corporations in China generally utilize transfer pricing to shift profits on inside trade, and no matter whether these behavior is on the Purpose to avoid taxes or not, it must reduce our country' s tax income, influence the fiscal revenues and our country, normal economic order. And this indicates that our country' s laws, regulations and measures against multinational corporation transfer Pricing are not imperfect, which need to be improved according to international advanced experience and thus can control effectively transfer pricing.The paper, in the first place, explains why selecting the title and the significance of studying the topic. Then it introduces the concept and the theory of transferring price, and focuses on the analysis of transfer pricing in tax motivation, un-tax motivation and the pursuit of tax policy and investment environment. And then, based on the theory and in light of China's current legal environment and policy, the paper comes to such conclusions: tax motivation is unclear; the un-tax motivation is to evade the political risk, to avoid the exchange rate risk and to gain benefit illegally. Larger multinational corporation prefer better investment environment, and the small ones prefer preferential tax policies. The latter is bad for our economy. Then the paper sets up a model to explain how the transfer pricing actions are influenced.In the last part, the paper uses for reference international advanced experience to put forward advice against multinational corporation' s transfer pricing in China.