Research Of Non-listed Company Equity Transfer Pricing

As Chinese capital market is opening to the world step by step. Multinational companies are running into Chinese market, at the same time, while the merger&acquisition operations are growing very fast, more and more company set up "pipe companies" in "tax havens" to avoid tax in equity transferring. However, our tax authority lacks the experience to manage this. For preservation of Chinese legal tax revenue and right of company conducting transferring, we should draw attention to the research of the method of transfer pricing.In this article,1explain the goal and meaning of using Market Method in unlisted company equity transfer pricing and the existing research and study of transfer pricing. Then I go through the case that state tax bureau adjusted the transferring equity price of Jinan WoDe Auto, digging into the reason and process of the adjustment regarding the Market Method of transfer pricing. Besides,1make a the pro and con analysis of Market Method about this kind of transfer pricing operation. At last, I offer my advices on how to solve the problems of taking Market Method in transfer pricing.The conclusion drew from this research are that the state tax bureau identified the real value of that equity transferring accurately and,on the other hand, provided good experience to follow in future similar approaches. However, our tax authority still lacks the experience and techniques in using Market Method on transfer pricing otherwise the result would be more accurate. There is still plenty of space to dig into for monitoring the transferring pricing operations. What’s more, we are still under a very backward information disclosure system for capital market, and it results in the limited using of Market Method. Besides, I offer advices on how to make better use of Market Method.