On The Transfer Price Of Foreign Funded Enterprises In China

Transfer price of foreign funded enterprises in China is discussed in this paper. And it mainly focuses on three key contents about it: the transferring profits status quo, the mechanism of transfer pricing, and the regulation on transfer price.Chapter 2 is the theoretical basis of this paper, in which the researches on transfer price are reviewed and the concepts relating to foreign funded enterprise and transfer price itself are introduced. The transfer price analyzed in this paper is limited in the category of foreign funded enterprises, specifically including Joint Ventures, Contractual Joint Ventures, Wholly Funded Enterprises and Foreign Funded Incorporated Companies. Transfer Price means the price of the tangible property, intangible property, service or capital transacted between affiliated enterprises especially in the multinational corporations. The motivations of using transfer price by foreign funded enterprises can be divided into tax motives and non-tax motives. In addition, the methods of transfer pricing includes the ways based on profits and those based on commercial competition.The transferring profits status quo of foreign funded enterprises is discussed in Chapter 3. By analyzing the ability of repaying debts, operating, and making profits, it is proved that foreign funded enterprises have more advantages than the state owned enterprises. But the assessment of the elements relating to deficit shows that the foreign funded enterprises are now in a worse situation than the state owned enterprises. So it can be assumed that transferring profits is one of the probable reasons to the deficit of foreign funded enterprises. Then the overall transferring profits of foreign funded enterprises are estimated quantitatively, and it concludes that the increase of transferring profits is much faster than the increase of total incomes, which must result in a series of negatives to a larger extent.