On Multinational Corporation's Transfer Pricing For Tax Avoidance

In recent years, the Multinational Corporation's Transfer Pricing for Tax Avoidance practice has become a prominent phenomenon and attracts attention from various departments concerned. As for this issue, based on the analysis of the internal trade patterns of the multinational corporations as well as the motivation of their transfer pricing, the conclusion has been come up with that the international tax avoidance is not only one of the important motivation of transfer pricing but also one of its necessary consequences. Following is the detailed illustration of the general operation of the Transfer Pricing for Tax Avoidance, price -setting policies and features of tax avoidance. In accordance with China's current policies concerning tax revenue and foreign-found business, in- depth study has been made on the features, patterns of multinational corporation's transferring price for tax avoidance and on why the practice is so prevalent in China. At last, suggestions are put forward with regard to purifying macro- environment of economy, improving the transfer pricing system and strengthening the tax revenue collection and management system for the transfer pricing. The essay consists of four chapters, summarized as follows:Chapter 1In this chapter, Such things as the settings of the paper, its purpose, the comprehensive description of the relevant references and books are introduced .in addition , some concepts are defined herein and the outline of the article as well as the new ideas are also mentioned .Chapter 2This part centers on the supporting of the argument that the international tax avoidance is not only one of the important motivation for transfer pricing but also one of its necessary consequences and transfer pricing is a major approach for the transnational businesses to achieve the strategic goal of internal trade. It is a general practice to transfer the profits from the high tax countries to lower ones. This tax avoidance practice is based on the difference in the income tax of each individual country and their different tariff rates. Tax avoidance through transfer pricing is...