The Research Of Transfer Pricing Risks Of Multinational Enterprises

In recent years, the phenomenon in multinational enterprises of using the method of transfer pricing between affiliated enterprises to transfer profits and avoid tax becomes more and more common, which attaches the wide attention and high priority from all over the world. Since the reform and opening up, China has vigorously advocated the investment, given many policies to the Foreign. Coupled with our abundant natural resources, cheap labor and other natural advantages, it has attracted a lot of foreign capital to invest in China. On the one hand, the establ ishment of foreign-funded enterpr ises brought the advanced production experience and technologies, provided a large number of jobs, and made an important contribution to accelerate the economic development; but on the other hand, with the increase in the number and amount of investment, there are many enterprises showing an abnormal state of their profit or loss, which has seriously damaged our country's tax benefits. After the new enterprise income tax law, China tax authorities of transfer pricing also presents the development of increasingly stringent regulation, thus tax risks faced by enterprises become bigger and bigger.To achieve their business goals of profit maximization, on the one hand, enterprises get higher income, on the other hand, they cut down costs as much as possible. Tax cost is one of these important factors affecting business decision-making, prompting enterprises pay more and more attention to tax planning. In multinational enterprises tax planning practice, almost all of the enterprises choose the transfer pricing as the preferred way, not only because the tax agreements between countries provide a number of special preferential pol icies to enterprises, but also the convenience of controlling the internal pricing. Transfer pricing between affiliated enterprises, however, as a double-edged sword, which is not in conformity with the principle of pricing can make the enterprise into a disadvantage by the tax authority survey adjustment, so as to bring greater tax risks and losses, so take the way to carry on the tax planning must be doubly cautious.In this paper, on the basis of analyzing the causes of transfer pricing tax risks in enterprises, author sums up five main reasons, they are relatively complicated tax system, quickly policy update changes, insufficiently professional staffs, i nadequate attent ions from management layer and defect ive communications both enterprises and tax authorities. And then, in Enterprise A's transfer pricing case, the paper summarizes the high risk points in these main aspects, which are Production and Operation Analysis, Functions and Risks Matching Analysis, and Transfer Pricing Documentations Preparing, then, puts forward relevant countermeasures and suggestions in order to help enterprises being familiar with the our transfer pr ici ng regulations, carry ing out transfer pricing works properly, and recognizing tax risks timely for avoiding losses. The paper also introduces the theory of transfer pricing, risk management and tax risks in add it ion, to makes the contents more complete and easy to understand. The forecasting about the future development of tax system and regulatory environment, aims to attach the multinational enterprises'attentions to the urgency and importance of transfer pricing tax risks.