Research On Transfer Pricing Strategy Of Multinational Enterprises

For the international enterprises who want to expanse global business, China is a perfect country with great policy environment and trend of economic development. Since the reform and opening up, China absorb more and more foreign investment and has become the country who absorb largest foreign investment in the world. At present, many multinational companies has set up subsidiaries in China, so how to use the multinational enterprises preferential policies that Chinese government provide to them and maximize their group interests, has become the most important issue for these companies. One of the most effective means to achieve this goal is transfer pricing strategyThis paper based on the international standards’definitions and regulations of transfer pricing, using the P&G group as a case, discussed that international enterprises how to choose an appropriate and legally transfer pricing method, to avoid tax risk as well as achieve maximum profits and reach the strategic goal of their enterprise management.This paper expounds theoretical basis of transfer pricing both in domestic and aboard, listed five kinds of transfer pricing methods that may apply to P&G group according to the provisions of the relevant international standards. Secondly this paper introduced the overall structure and business scope of P&G group, compared and analyzed the different features of five kinds of transfer pricing method, described the selection process of of P&G group to choose the best transfer pricing strategy, and compared the other international companies to verified the efficiency, got the conclusion that the transfer net margin method is the best transfer pricing method for P&G group and its related parties. Finally, this paper analyzed the negative effects of the transfer pricing strategy and provided some countermeasures.This paper explored how to use the theory and policies in actually, choosing P&G group as a case, combining with the knowledge of MPAcc courses,analyzed the international companies how to achieve an effective transfer pricing tragedy.