Multinational Companies Avoid Import Tariff By Transferring Price

With the deepening of economic globalization, Multinational companies have had ahuge impact on the world economy development with their own advantages. As the largestdeveloping country, and with30years of reform and opening up, especially after joiningthe WTO, China is gradually expending market opening. Many multinational companieshave entered China seeking to develop, promoting the prosperity of China economy. At thesame time, the phenomenon that multinational companies take advantage of foreigninvestment to avoid tax to maximize the benefits becomes increasingly frequent. In theseavoidance methods, transferring price is more subtle. These companies with the advantagesof global souring, marketing and technology transfer pricing through related partytransactions by taking full advantages of the tax difference between different countries, aswell as Chinese and foreign government regulatory tax loopholes.This article focuses on analyzing the act that multinational companies transfer pricingto avoid customs import tariff. These companies reduced import tariff through a lot ofinsider trading, and enhance their competitiveness. These actions not only led directly tothe loss of state tax revenue, but violated the fair and reasonable principles, destroying theindustry environment of fair competition. In order to establish a fair and reasonable tariffstax environment, promote other types of enterprises and multinational companies tocompete on the same starting line, and safeguard China’s national tax, customs need acorrect understanding of it, and continue to improve supervision, analyze the root causes ofthe problem, so that we can find a solution.This article will expand research from the regulatory point for the act thatmultinational companies transfer pricing to avoid import tariff. The thesis is divided intofive chapters, sub-chapter clarifies the theories of import duties and transfer pricing, andanalyze the way foreign government put through to handle the problems combined with the actual cases. I will propose some appropriate countermeasures or suggestions for some ofthe problems currently existing in terms of customs supervision.