The Dilemma Of Transfer-pricing System In China And Relevant Suggestions For Its Improvement

As to the current system of transfer-pricing regulations in China, it can be concluded as the following two characteristics: different treatment between native enterprises and foreign-invested enterprises and the fragmentation of its legal system. The different treatment between native enterprises and foreign-invested enterprises adopted by the current system of transfer-pricing regulations in China is inconsistent with China's obligation under Article III: 1 and Article III: 4 of GATT 1994. As to the fragmentation of the current system of transfer-pricing regulations in China, it does not constitute any direct conflicts with China's relevant obligation under WTO legal system. However, in WTO legal system, the principle of transparency is imposed on its members. The fragmentation renders the conflicts between the current system of transfer-pricing regulations in China and China's obligation under the principle of transparency in WTO legal system.From my individual perspective, both the different treatment between native enterprises and foreign-invested enterprises and the fragmentation of its legal system shall be abandoned in order to improve the transfer-pricing regulations in China. According to relevant international legal regulations, such as WTO laws, these two characteristics bring China potential risks. Besides that, the different treatment between native enterprises and foreign-invested enterprises is inconsistent with the trend of China's relevant legal system. Such kind of conduction also is not conducive for the overflow effect of foreign direct investment in the development of national economy. However, the different treatment between native enterprises and foreign-invested enterprises is closely related to the fragmentation of its legal system. Hence, the improvement of transfer-pricing regulations in China must solve the problem of fragmentation. The writer starts relevant analysis from the present system of transfer-pricing regulations and tries to solve the two drawbacks as mentioned above, in order to improve the transfer-pricing regulations in China.