Research On The Problem Of Anti-tax Avoidance In Transfer Pricing Of Intangible Assets

At present,with the development of knowledge economy and digital economy,intangible assets have the characteristics of concealment,coexistence of high income and high risk,various forms of expression,wide spread and arbitrary creation of value contribution increasingly.Therefore,multinational companies use cost sharing agreements to avoid taxation through transfer pricing of intangible assets,which poses a huge challenge to international taxation.For example,Apple's tax avoidance case is a typical case of multinational companies' transfer pricing of intangible assets,and cost sharing agreements play a key role in it.After introducing the basic facts of Apple's tax avoidance case,this article analyzes in detail Apple's tax planning for tax avoidance.In this case,Apple divided the ownership of its intellectual property rights into legal ownership and economic ownership,and used a cost sharing agreement to avoid the huge taxes that it should have been borne in the United States.The tax avoidance issues reflected in the Apple tax avoidance case mainly include: the ownership of intangible assets,the determination of the return on the value of intangible assets,and the regulation of cost sharing agreements.Based on the analysis of Apple's tax avoidance case,this paper studies the basic theories of intangible assets transfer pricing and anti-tax avoidance,focuses on the definition,characteristics and classification of intangible assets,the concept and subject of transfer pricing,the relationship between transfer pricing and cost sharing agreement,the basic principles for anti-tax avoidance related to transfer pricing of intangible assets,and other important theoretical issues.Next,Apple's tax avoidance case will be combined with U.S.tax law and OECD Guidelines(2017)to analyze the anti-tax avoidance issues in connection with transfer pricing of intangibles.First,with respect to the determination of the ownership of intangible assets as well as the return on value thereof,statutory provisions and contractual stipulations shall be the starting point for determining the legal ownership of intangible assets,and the economic ownership of intangible assets shall be determined according to the principle of economic substance.Second,regarding the regulation of cost sharing agreements:according to the tax law of the United States,cost sharing agreements shall not only be consistent with the arm's length principle,but also meet the relevant administrative and substantive requirements;The OECD Guidelines on Transfer Pricing(2017)provide for the type of cost sharing agreements,the determination of parties to such agreements,the calculation of expected benefits and the determination of value contribution to each party to such agreements,so as to prevent affiliated parties from using cost sharing agreements to avoid tax.the US Tax Cuts and Jobs Act established three innovative regimes for anti-avoidance of intangible assets transfer pricing,including: the Global Intangible Low-Tax Income System,and the Foreign-Derived Intangible Income System and the Base Erosion and Anti-abuse Tax System.This article introduces these three anti-tax avoidance innovation systems one by one,and analyzes their possible impact.These three innovative anti-avoidance systems are the new application of the global formula distribution method to the anti-tax avoidance problem of transfer pricing of intangible assets.Finally,based on the study of China's current intangible assets transfer pricing anti-avoidance systems,combined with the problems reflected in Apple's tax avoidance case and the impact of the anti-avoidance innovation systems established in the Tax Cuts and Jobs Act after the Trump's tax reform.This article believes that China should attach importance to intangible assets to deal with the challenges of tax base erosion and profit shifting;rationally apply the value chain analysis method to distribute profits according to actual contributions;refine the relevant provisions of the cost-sharing agreement;and finally deal with the adverse effects of Trump's tax reform by strengthening international cooperation.