Multinational Companies In China Tax Planning Study

Tax planning is the legal right of taxpayer, and also is the fist choice of taxpayer in order to avoid tax. With the globalization and economic integration, especially rapid development of E-commercial, tax planning of MNCs would be more and more complex and comprehensive. As the main body of international tax planning, MNCs take the advantage of plenty of capital and complete knowledge of tax laws of different countries to plan their tax around the global corporate setting. With sophisticated tax planning, MNCs save hundreds of thousands dollars and maximize their profit. China has attracted the most foreign investment among developing countries, as is evidenced by the fact that by the end of 2003 there had been 465 277 projects in operation with a total contractual value of US$943.13 billion and an actual value of US$501.471 billion. Moreover, MNCs still increase their investment in China at a high speed. As a result, China has become an important battlefield of MNCs' tax planning, which was integrated in every business unit: strategy management, organization structure and business operation. On the one hand, the investments in China are the results of tax planning; on the other hand, the operation of investment also contains tax planning. Furthermore, the preferential national treatment policies adopted in China provide MNCs more room for tax planning.