Research On The Tax Administration Of The Multinational Companies’ Transfer Pricing

Since the second world war, with abundant capitals and advanced technologies multinational companies expanded rapidly, and established nearly10,000overseas subsidiaries. Now they have a decisive influence on the world economy. Because of the differences between countries’ tax systems and tax loophole, multinational companies adopts the transfer pricing more often in order to escape the tax burden and maximize the multinational group’s overall economic interests. The main countries in the world have established transfer pricing tax system, and constantly strengthen the tax administration for the multinational companies’ transfer pricing. And since the reform and opening up, China has become one of the most attractive countries for foreign investment. More and more multinational companies set up new subsidiaries with production, sales, research and development functions in China. They engage in manufacturing, services, real estate, and many other industry. This not only brings the advanced technologies and experience, but also promotes the national employment, and effectively promotes the domestic economy. But multinational companies’ transfer pricing inspected by the State Administration of Taxation encroach on the Chinese investors’ interests, and harm the tax income of our country. We started later in the tax management for the transfer pricing compared compared with other foreign countries, but in recent years we have gradually formulated relevant transfer pricing laws and regulations, especially in early2009issued special tax adjustment method. And the tax authority also continuously strengthens the tax inspection of the transfer pricing. There are still some unsound tax rules and insufficient experiences, so we need improve the tax administration of the the multinational companies’transfer pricing by learning from foreign advanced experience and summarizing in our own practical experience. This essay will studies multinational companies’transfer pricing from the tax management angle. First combined with the researches on transfer pricing in both at home and abroad, it explains the meaning and purpose in the introduction part. Secondly, it elaborates the related concepts and basic theories about multinational company transfer pricing, and the theoretical base of the multinational companies’ transfer pricing tax administration,and the main principles which it follows. Thirdly according to the present situation of the foreign investment, it analyses the multinational companies’ transfer pricing in China and our government’ tax administration in the aspects. Then it points out the main problems which exist in the tax administration of the multinational companies’ transfer pricing. Then reference to OECD’and several typical countries’ related experience in the tax administration of transfer pricing, it proposes that we should improve the tax administration of the multinational companies’ transfer pricing by optimizing the transfer pricing tax system, reforming the soft environment of the tax administration of transfer pricing and strengthening international cooperation.