The Research On Anti-tax Avoidance Of Multinational Corporation Transfer Pricing Of Intangible Assets In China

With the development of international economic activities, international tax issues appear. For the pursuit of maximum profit and the need of global business strategy, Multinational corporations widely use transfer pricing in the intra group transactions to avoid international tax. As the occurrence of this problem, the international tax issues become more and more important for the national tax authorities. Intangible assets become the main driver of business development and directly enhance the enterprise’s value with economic development and technological progress. Transactions of intangible assets within multinational groups have been increasingly frequent and diversified and complex. Due to the existence of differences in national tax rates and the tax system, multinational corporations generally use transfer pricing of intangible assets in the global in order to seek international tax avoidance.Since reform and opening-up, large amounts of foreign capital flow into China. Multinational corporations have begun to enter the Chinese market, which brings capitals and advanced technologies, promotes the development of our socialist market economy and brings the transfer pricing problem into China. As the rapid development of knowledge-based economy and the continuously improvement of Chinese socialist market economic system gradually improved, Chinese government began to pay attention to the optimization of the industrial structure adjustment, encouraged development and transfer of intangible assets such as new technology. Intangible assets transactions and ratio are improved greatly. According to the need of economic development, tax avoidance motivation of transnational corporation becomes growing. More and more transfer pricing by transaction of intangible assets within the group is used for tax avoidance. These actions of multinational corporation drive our tax authorities attaching great importance to the international tax issues. The work of anti-tax avoidance was tasked on the agenda.Intangible assets are different from tangible assets, which ordinarily have certain unique such as exclusive, proprietary etc. The determined value is often difficult to quantify, when especially the transactions occur in intra groups. Because of the similar transactions occur less frequently between independent enterprises, the tax authorities are difficult to find the comparable uncontrolled transaction. The normal market price is difficult to be judged. The world governments are constantly exploring the international tax problems. USA and OECD are the typical representations. Early Chinese authorities didn’t focus on these problems. Our current transfer pricing regulations are the unity of all types of transactions, and don’t consider separately the adjustment issues about the transfer pricing of intangible assets.In order to maintain our country’s tax benefits in international economic exchanges and prevent the tax base erosion and profit transfer, the fairness of the tax law, Chinese government needs draft adjustment regulations of intangible assets transfer pricing which are applicable to the situation of our country. With reference to the current international transfer pricing adjustment concept, Chinese government should learn from other countries and international organizations advanced legislative experience in this process.This paper analyzes two aspects that contain the characteristics of transfer pricing of intangible assets and anti-tax avoidance. First, from the development of the situation and development trend of foreign investment in China, combined with the definition and characteristics of intangible assets, the paper systematically analyzes present situation and the existence problems of transfer pricing of intangible assets of multinational companies in China. The above analysis leads to deposit development situation and the problem in the reality of transfer pricing of intangible assets in our anti-tax avoidance. Using the game theory, the thesis dialectically analyzes the influence and restriction relationship between tax avoidance and anti-avoidance. Then using comparative analysis of the adjustment cases, discuss the objectivity of adjustment results to explore new ideas and methods which apply to the transfer pricing of intangible assets; finally combining with the transfer pricing provision about intangible assets in our legislation, put forward improving countermeasures.