Discussion On Transfer Pricing Of Foreign-invested Enterprises And Its Regulation

In the context of economic globalization, the transnational economic have a rapiddevelopment. As the main driving force of China’s economy, the role offoreign-invested enterprises can not be ignored. However, in the process ofcross-border investment, in order to achieve the purpose of maximizing profits,foreign-invested enterprises take the advantage of the state-to-state production andsales, reduce or even escape tax obligations through national tax differences and theloopholes of foreign tax laws and international tax law. International tax avoidanceresulting among them, the most typical means is transfer pricing. To protect nationaltax revenue and prevent foreign-invested enterprises from escaping international taxburden it shall bear, many countries have begun to establish and improve the transferpricing tax system.The introduction of foreign-invested enterprises has been proved to be asuccessful model by our30years reform process. It has enhanced the level of China’seconomic development rapidly in a short period of time. However, in order to achievevarious purposes such as maximizing profits, some foreign-invested enterprises makeuse of China’s lacking experience in tax legislation and management, to avoid orreduce taxes through transfer pricing, which cause not only serious loss of ourinternational tax, but also serious damage the interests of investors in China. China’santi-avoidance work still has a long way to go. At present, China’s transfer pricing tax system just started to develop. There arestill many problems overall. Thus, in the current economic construction process, taxreform is a subject can not be ignored. It is very important to research and furtherimprove China’s transfer pricing tax regulation, improve anti-avoidance ability of thetax authorities. With a title of “Discussion on Transfer Pricing of Foreign-investedEnterprises and its Regulation”, this thesis discusses common methods used byforeign-invested enterprises in transfer pricing and analyzes some other countries’existing transfer pricing legal system. On this basis, according to the actual situationof China’s foreign-invested enterprises, this thesis has an empirical analysis of themotives of transfer pricing, and focuses on legal measures which can effectivelyprevent to transfer pricing of foreign-invested enterprises, finally figure out a feasibleprogram for the perfection of transfer pricing tax system.