Tax Risks Of Transfer Pricing Of Multinational Enterprises And Their Prevention

Since the reform and opening up,China's economic globalization has developed in depth.Especially after joining the WTO in 2001,GDP has increased by about nine times in just 18 years,and a large number of foreign-invested enterprises have entered the Chinese market.The entry of foreign-invested enterprises has further promoted the development of domestic enterprises.A large number of Chinese manufacturing has appeared in the international market,so domestic-funded enterprises have stepped out of the country and promoted the further development of China's economy.Therefore,multinational enterprises have become a very important part in the rapid development of China's economy.Many multinational corporations use the difference in tax rates and adopt transfer pricing behavior to reduce the tax burden.Therefore,transfer pricing has become one of the important means for multinational corporations to avoid taxation.The use of transfer pricing to avoid taxation in the process of"introduction" of foreign-funded enterprises and "going out" of domestic-funded enterprises has accompanied many problems such as the erosion of international tax bases and the loss of national fiscal revenue.There are even many multinational corporations that subjectively or objectively transfer large amounts of profits generated in connected transactions in order to evade the amount of tax that enterprises should pay.However,China's original international related transactions started later than developed countries,so the formulation of laws and regulations related to transfer pricing is relatively late.Under the current legal and regulatory system in China,multinational corporations that transfer large profits will be listed in key survey targets,which may lead to serious loss of tax revenue in the country and may even adversely affect the entire market.The main idea of this paper is to study the transfer pricing tax risk of multinational corporations and its prevention.Firstly,it sorts out the concept and method of transfer pricing and how the multinational corporations conduct theoretical knowledge of transfer pricing,and then sorts them based on the perspectives of tax authorities and multinational corporations.The reasons for the tax risks and the possible impacts are finally combined with specific examples and relevant laws and regulations to analyze the tax risks arising from transfer pricing and propose corresponding solutions.The paper adopts two typical cases of multinational cor:porations,and analyzes how to use transfer pricing to conduct unreasonable tax avoidance,which leads to the taxation risk of the tax authorities to investigate and pay taxes and penalty interest,and then proposes five preventive measures against tax risks.It mainly includes evaluation and analysis of transfer pricing tax risks,timely adjustment of transfer pricing of related transactions,provision of accurate contemporaneous information to tax authorities,construction of an internal tax risk management system,and development of a reasonable APA mechanism.At the end of the article,according to the economic situation and literature research,the tax risks of transfer pricing of multinational corporations are studied.Multinational enterprises need to study more strategies to deal with tax risks,improve the economic benefits of enterprises,and make a fair competition environment for the market,contribution.