Research On Transferring Pricing And Tax Transfer Of The Multi-national Company

Multi-national company (MNC) plays a vital role in today's economic globalization and regional economy integration world, in another word, they help each other. With MNCs grow larger and larger, it becomes an important source of a country's tax income. But the ultimate goal for MNC is to maximize profit which is opposed to their tax obligation. This goal could drive MNC take advantage of tax regulation and foreign tax law difference among each country and incompletion to avoid or minimize their tax payment to achieve its strategic objective and realize their global management goal, which on the other hand, result in the deduction of the hosting country's tax income. The most typical way is transfer pricing. As a result, since 1970s, lots of European countries design taxation system to prevent MNC from taking pricing transfer to realize tax avoidance.Since the implementation of the policy of reform and opening up to the outside world, China's economy has grown by leaps and bounds which attracts lots of multi-national companies to invest in China. MNC not only bring lots of fund but also introduce advanced technology and new management theories meanwhile create lots of job opportunities and increase China's tax income. Since the incremental tax income has a huge gap with the profit that the MNC get from China, which bring up China's tax management problem. China's tax laws on transfer pricing needs to be improved.The study methodology of this paper is as below: start with MNC's transfer pricing strategy, from tax avoidance angle to study and analysis behavior, goal behind it and how the companies apply it. And then combine author's anti-tax avoidance experience that learnt from work to do a case study. Following by that, from tax bureau management point of view, based on the tax laws on transfer pricing, international tax collection and management and subscription pricing, make several suggestions on how to improve transfer pricing taxation system. The key point for this paper is to analysis how MNC take advantage of the local tax laws to apply transfer pricing and the figure out the problem that transfer pricing taxation system China currently facing, and give suggestion and countermeasure to improve it in terms of transfer pricing principle and detailed regulation.