Research On Tax Planning For Guangzhou CF Technology Limited's Associated Transaction

The business operators and tax authorities, just like the Mouse and the Cat in cartoon story, the "game playing" between them is all along existed. The domestic enterprises, foreign-funded, the multi-national enterprises are all in the game. When there are associated transactions on assets, capital or services in multinational group, the tax authorities will spare no effort to protect the country's tax revenue from being losing. More and more multinationals have noted that their Transfer Pricing policy should be complied with China's Transfer Pricing regulation, but in the meanwhile, the reasonable tax planning mustn't be ignored. For the operators, they should focus on two points:whether the transfer pricing for the object is reasonable; whether the usage of tax law is proper. Guangzhou CF Technology Limited (hereinafter referred as GZ CF) is a fully funded subsidiary of DXYK Group, setting up in 2005. The multination is dedicated to provide the customers with services of system integration and software research & development. The main transaction between GZ CF and its associated parties is service, the annual associated transaction value is up to over 15 million yuan. Therefore, the tax planning for the associated transaction has become an important management practice to realize the company's profit target to some extent.Based on theoretical analysis and actual data research, this dissertation firstly analyzed and justified GZ CF's transfer pricing, then to make tax planning on the revenue under the transfer pricing through two tax preferential policies:one is exemption of business tax on revenue from technology development, the other is service outsourcing, further to table the practice proposal. Finally, to draw a conclusion:based on the arm's length principle, GZ CF is suited to adopt full cost plus method as its transfer pricing, at the same time, the relevant tax can be saved by tax preferential policies. The method used by this dissertation to prove whether the transfer pricing accords with the arm's length principle, and how to create conditions to apply to the tax preferential policies can be a reference for the similar foreign-funded companies.