Research On Transfer Pricing Adjustment Legal Problems In Customs Valuation

For the consideration of fairness, Transactional Value Method cannot be applied to transactions between related parties at the first place unless such relation has no influence on the transaction price thereof; on the other hand, tax authorities need to adjust the related transaction prices according to arm’s length principle so that they can find out the real taxable profits enjoyed by companies, and such procedures constitute the transfer pricing adjustment system. This thesis mainly focuses on the connections between abovementioned two systems. The preamble aims to clarify the topic of this thesis, and to introduce the logic of this study. The discussions in this thesis is divided into four parts as the four chapters thereof, and then comes the conclusion.In Chapter One, the discussions are mainly about the legal definitions of "customs valuation" and "transfer pricing", and the corresponding legal systems on domestic and international levels. The author firstly summarizes the development of customs valuation system and introduces the now effective customs valuation legal system in Section One, and then explores the legal definition and legal system of transfer pricing from the perspectives of international law, domestic law and academic views to present the author’s own understanding thereof in Section Two, and finally discusses the logic between transfer pricing and customs valuation system in Section Three.Comparative study is carried out in whole Chapter Two to study the systems of customs valuation and transfer pricing in an all-round way. In Section One the author analyzes the reasons why customs valuation system appears to be impotent when facing with transfer pricing, and the comparability of these two systems. From Section Two to Five, comparisons between these two systems are carried out in the dimensions of basic principles, the judgment of related transactions, and operational methods to find out the common points and differences thereof, and then the conclusion is given in Section Six accordingly. The conclusion of this chapter is that some transfer pricing methods can be used to supplement the Transaction Value Method, and the feasibility thereof comes from the high similarity between the two systems in their basic principles, judgment of related transactions and operational methods, and the fact that the several operational methods of customs valuation are equivalent in valuation effect also contributes to the feasibility abovementioned.The role of Chapter Three is to summarize the contributions by international organizations and foreign legal systems to the coordination of the systems of customs valuation and transfer pricing. Different views, including the supporting ones and precautious ones, towards such coordination are introduced in Section One. And then the efforts and breakthroughs made by WCO and OECD for such coordination are presented in Section Two, such as holding joint conferences, forming joint focus group and producing commentary opinions. Section Three is mainly about the practice of USA, Canada and South Korea to coordinate the systems.The author discusses the problems arising from China’s domestic academic research and customs valuation practice related to the topic of this thesis, aims to find out some solutions thereto. In Section One, the reasons why there is only insufficient theoretical studies are explored and the solutions are found accordingly, the most important of which is to share the related materials developed or kept by customs authority. Section Two is mainly about the practical problems arising from the customs valuations for transfer pricing transactions, and some basic solutions thereto are also provided in this section according to the full content of this thesis.