Research On Tax Risk Control Of Transfer Pricing In Multinational Enterprises From The Perspective Of BEPS Action Plan

Multinational corporations,which is closely related to the integration of global economy,have been gradually expanding their scopes in developed countries since the middle of the 20th century.With the continuous redistribution of resources and profits on a global scale,transfer pricing has become a powerful tool for multinational corporations to achieve decision-making goals and enhance international competitiveness.However,under the temptation of profit-seeking psychology,many multinational corporations have tried to use transfer pricing to evade their tax obligations,thereby maximizing their profits.This tendency prompts tax authorities in various countries to continuously strengthen investigation of anti-tax avoidance measures to make judgments,for which multinational corporations face comprehensive risks.in terms of operation fund,reputation and other aspects.The progress of the BEPS action plan has strengthened the exchange of information among tax authorities in various countries and the fight against tax avoidance.This puts forward new requirements for the transnational corporations to carry out compliance management within transfer pricing activities.How to propose the optimal path of transfer pricing under the premise of minimizing tax-related risks has become an intractable problem for the management of multinational corporations.Since the carrying-out of the Reform and Opening-up policy,Chinese government has vigorously supported development of the LCD industry.Fujian Province,which locates on the west coast of the Taiwan Strait,has won the favor of many foreign businesses.The upgrading of LCD products has promoted the expansion of related industries.However,the flow of foreign capital involves the problem of transfer pricing between affiliated companies.Based on the case study method,this paper uses AX Optronics' cross-border related business with a good tax credit rating as the entry point,to propose an optimization solution for the transfer pricing of multinational corporations,as well as improve the internal system.The conclusion puts forward relevant suggestions,hoping to bring some inspiration to the tax risk control of transfer pricing in the LCD industry.This paper starts by sorting out the concepts of transfer pricing,related transactions,etc.,as well as expounding the basic theories of transfer pricing methods and comparable analysis,then introduces the theory of tax risk management related fields.Under the guidance of substantive results of the BEPS action plan,this paper introduces the evolution of domestic transfer pricing laws and regulations.Secondly,through a comprehensive description of the trading profile of AX Optronics and related companies,according to the latest legal guidance of the OECD as well as function and risk analysis,under the premise of using the transaction net profit method,the paper selects the full cost-plus rate from many profit indicators.The comparable analysis by the quartile interval method proves that AX Optronics' 2016 transfer pricing behavior is in line with the principle of independent transactions.Finally,the paper introduces analytic hierarchy process(AHP)to identify the tax-related risks that may exist in AX Optronics' transfer pricing process in the form of expert scoring.At the same time,the paper uses Lingo software to solve the lowest-risk transfer pricing method in the form of linear programming model,from which proposes feasible recommendations for the tax risk management of transfer pricing in multinational corporations.