Research On Tax Administration On Transfer Pricing Of Multinational Corporations In China

With the development of economy and globalization, cross-border transactions are growing vigorously. To gain the maximum profit in the world, multinational corporations, in the mean of transfer pricing, transfer profit from countries to countries, which cause tax revenue decrease in some certain countries and disturb the order of international laws. Recently, transfer pricing is getting more and more complex and complicated, and all countries take steps to fight against it. In the late 1980s, China adopted the policy of foreign businesses and investment attraction, and a number of multinational corporations came to China for business. At that time, multinational corporations began to evade tax in the means of transfer pricing. To deal with the issue, China implemented a series of laws and regulations of transfer pricing in the country. After continuously absorbed other countries’experience and carried on the practice, China has built up a set of unique management system of transfer pricing. As a developing country, China is a latecomer and there are some problem and shortage in the transfer pricing tax administration. Developed countries and international organizations implement the transfer pricing tax administration at an early time, the Organization for Economic Cooperation and Development transfer pricing guide (OECD guide) and United Nation manual (UN manual) have become the golden rule in most of the tax authorities to deal with transfer pricing issues. Recently, Base Erosion and Profit Shift (BEPS) action plan is released to constantly improve the existing transfer pricing guidance.This author states the issue of tax administration on transfer pricing of multinational corporations in China from the perspective of the tax authorities, expounds the tax administration situation, analyzes its existing problems, and takes the UN manual, OECD guide, BEPS action plan and other mainstream transfer pricing guides as reference, then gives suggestions on tax administration on transfer pricing of multinational corporations in China.