Research On The Establishment And Usage Of The Customs System Of Examining Transfer Pricing

After China's entry into WTO,a huge number of subsidiaries of multinational companies have been established in China.Multinational companies have become an important part of China's trade,whether in domestic trade or import or export trade.With the tax avoidance behavior,based on transfer pricing,of multinational companies being well known by the public,customs has also focused on the problems of related-party transactions and transfer pricing relating to the price of imported goods.However,subject to the gap between customs valuation laws and transfer pricing theories,customs could not find an effective solution in dealing with transfer pricing problems.Since the customs of many countries,including China,have not studied transfer pricing issues for long,it is difficult for customs officers to find,examine and solve transfer pricing problems,thus the customs valuation of transfer pricing has hit a bottleneck.By analyzing the difficulties of customs valuation in dealing with transfer pricing and by referring to the practices and experience of the tax department's utilization of commercial database,this paper proposed to establish the customs system of examining transfer pricing,based on the import price and resale price of imported goods and the financial data of import companies.Choosing gross margin as core indicator,this system selects the data of the companies or goods in his database,compare them with the data of the company or goods in question and determine whether the import price of the company or the goods in question is influenced by the relationship between buyer and seller and whether there exits transfer pricing problem.According to the features of establishing this system,this paper propose the scheme of establishing it based on commercial database in short-term,the data collected by customs in mid-term and the data from companies' ERP systems in long-term.This paper also includes a case study in order to verify the feasibility of data collection and analysis function of this system and show the procedures of using it.By studying the establishment and usage of the customs system of examining transfer pricing,this paper summarized the main conclusions as following:(1)the customs system of examining transfer pricing is an effective solution to the problems in examining related-party transactions and transfer pricing;(2)China customs has already possessed the objective conditions for the establishment of the system..The merit in this paper is that the customs system of examining transfer pricing brings a new idea for customs in examining the transfer pricing of multinational companies.While simplifying the procedure and reducing the time cost,this system solves the key problem of examining transfer pricing,which is the incapability of examining and determining the price of imported goods involving related-party transactions and transfer pricing due to the lack of industrial or goods' data.Combining with big data and cloud computing,this system can also extend the examination of related-party transactions to the phase of import declaration,by warning the risk through automatic evaluation,so as to improve Customs' risk prevention abilities.