| In modern economic globalization, multinational corporations greatly promote the rapid growth of world economy and determine rules and developing trends of international economy by various operational activities such as global investment, production, sales or research and development, which makes them a shining star in the stage of world economy. And transfer pricing, accompanying the development of multinational corporations, increasingly demonstrates its charm under the impetus of overseas trade. On the one hand, as an important pricing mechanism of the internal trade in multinational corporations, its existence has brought outstanding sales results and therefore preferred. On the other hand, it becomes a tool of evading taxation in multinational corporations and produces a series of negative influence like eroding tax foundation and breaking fair allocation of tax in each country. So it is the objective of concern and regulation of tax authorities concerned. That is to say, the problem of pricing transfer has become the most important in contemporary international tax activities.Currently, every country all over the world is making efforts to strengthen tax regulations of transfer pricing and has taken effects in different degrees. Since the late 1980s, China has also entered into this. In the continuous exploration and research of more than 20 years, it is said that China has stood side by side with international rules in tax regulations of transfer pricing and made certain achievements in tax practices. However, compared with some advanced countries, disadvantages are still obvious. More importantly, there is an increasing speed of foreign investment in China, which is astounding to the whole world. This promotes the rapid development of Chinese economy and at the same time makes a more stern challenge, that is, transfer pricing is more complicated and tax evasion is extremely urgent.Considering this, the writer of this article makes a systematic research and exploration on the basis of absorbing and consulting others'research results, by practicing and investigating in person, and by combining standard and practical analyses, qualitative and quantitative analyses, and by using other methods like case analysis or comparative analysis. On the basis of all this, the writer puts forward the best path for choosing, which is meaningful in reality. The writer changes the idea of equaling transfer pricing and tax evasion held by some scholars and puts the idea of regulating into it. On the basis of fully and objectively commenting behaviors of transfer pricing and deeply analyzing its essence, the writer proposes to confirm the roles transfer pricing has played in international trade and the development of multinational corporations, and to appropriately use various regulating measures to correct inappropriate behaviors made in negative influence. In the core part of this article, the best path for choosing, the writer proposes the idea of systematic management and control internally and externally once again and puts systematic theories into it. The use of such an idea will forcefully promote the effects of tax regulations of transfer pricing in China. Besides, the writer also uses game theory and quantitative analysis in the research of this article. By the use of these analytical tools, we have a better understanding of transfer pricing and more powerful theories and data supporting are provided in our constructing a scientific and perfect system of tax regulations. However, due to the limitation of collecting data in the aspect of transfer pricing and some understanding error in resources of foreign languages, there still exist drawbacks. The writer is determined to perfect these in the coming practices and research.In the aspect of structural arrangement, the article starts from the phenomenon of tax loss produced by transfer pricing and follows the line of analyzing the causes of tax regulations, analyzing the mechanisms of tax regulations, consulting experiences of tax regulations and optimizing the path of tax regulations to make a gradual and deep analysis and investigation from outside to inside and from cause to effect.The article is divided into six chapters.Chapter One is Introduction. It briefly explains the significance of the topic choice, current research situations and methods internally and externally, ensures research line and structural arrangements of the article, and introduces the main novelties and existing problems.Chapter Two is the basic analysis of transfer pricing in multinational corporations. First, the article strictly defines some notions concerned with transfer pricing in multinational corporations. The purpose is to investigate problems within a united and definite range and avoid arguments caused by lack of definition so as to affect the effects of study. Then by chasing theoretical origin and describing the developing course of transfer pricing, we would have a all-around and systematic understanding of its production and development. Finally, the article makes a deep discussion of the factors influencing transfer pricing with the purpose of providing theoretical consultation for the measures of tax regulations of transfer pricing.Chapter Three is the practical research of transfer pricing in overseas corporations in China. This chapter makes an analysis of the current situations of transfer pricing in overseas corporations in China and consists of five parts. The first part is the analysis of motives. The writer studies the motives with many pages because different motives lead to different contents. A deep study of motives is helpful for us to know the nature of transfer pricing in overseas corporations in China. The second part is the analysis of the way of transfer pricing, mainly including visible assets, labor provision, capital circulation, invisible assets and equipment rental. The third part is the analysis of the existence of transfer pricing. The writer demonstrates it from three aspects, the current situation and characteristics of straight investment in China, the internal development of trade in multinational corporations in China and their operational achievements. The aim is to illustrate the necessity of regulating tax in China. The fourth part is the reevaluation of the extent of tax evasion by using transfer pricing by those corporations through adopting a new quantitative tool, cost profit ratio, to let us have a straight understanding of the current conditions related to tax evasion of transfer pricing. The fifth part is a concrete analysis of the effects produced by unfair transfer pricing. Just because the existence of if has brought great negative influence to Chinese economy, systems and some people concerned, the study of this article has more positive meanings.Chapter Four is the analysis of tax regulations of transfer pricing in multinational corporations in China. This chapter mainly elaborates the problems concerned from two different angles, general and special and consists of four parts. The first part analyzes from the general angle, mainly including introduction to basic theories, making a quantitative analysis of the interest conflicts and coordination of multinational corporations and tax authorities, two interest bodies in tax regulations of transfer pricing by using game theory, explanation of and comment on traditional system of transfer pricing and its limitations, and the introduction to and comment on booking pricing arrangements. The other three parts are all based on the practices in China, and make an analysis of the conditions of tax regulations of transfer pricing in China. The second part is the historical developing course. The third part is the achievements made. The fourth part is the analysis of the limitations.Chapter Five is the best path for choosing of tax regulations of transfer pricing in multinational corporations in China. It is the key and core part of the article and also takes most of the pages, consisting of two parts. The first part is international comparison and consultation. The study of transfer pricing in developed countries is far earlier than that in China. And a complete study system of theories and a strict and effective monitoring mechanism are formed. This part is to summarize the coexistence and experiences of transfer pricing by introducing, comparing and evaluating different systems and measures in each country and provides consultation and revelation for the scientific and effective regulations of transfer pricing in China in the future. The second part is the most important of all, that is, the best path choosing of tax regulations of transfer pricing in China. All the argument above is to serve this part. On the basis of the above analyses, and with the combination of Chinese current situations, the writer proposes a well-targeted and realistic regulation, making systematic construction at core and establishing a scientific and perfect system of transfer pricing, making administrative service as a tool and establishing an effective tax administrative system of transfer pricing, and making environmental construction as a guarantee and strengthen tax coordination and cooperation internally and externally.Chapter Six is a typical case analysis of tax regulations of transfer pricing in multinational corporations in China. Through three typical case analyses in tax practices, we could have a better understanding of the behaviors of transfer pricing in multinational corporations in China and the role and effects of tax regulations.
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