On Advance Pricing Arrangements Of Multinational Enterprise

Transfer pricing is an important international tax issues, it leads to transnational transfer of multinational interests between the affiliated enterprises. Because these affiliated enterprises are located in different countries, if there is a big difference of tax rate of each country, based on the purpose of company’s financial strategy, they will use the transfer pricing in order to transnational tax avoidance. At the same time, it involves more than two tax jurisdictions, inevitably, it relates the tax benefits of the relevant countries, and affects their national economy, so it causes the problems of transnational taxation and multinational tax competition.Since the beginning of1980s,our country has implemented the policy of opening to the outside world and the foreign investment enterprise develop very quickly,also existing seriously transfer pricing abusing. However,compared with the developed country,our tax regulations on transfer pricing and monitor method are quite relative backwardness,especially the Advance Pricing Arrangements is still in the beginning both the theory and the practices are poor.For the transfer pricing, our tax authorities mainly take measure of the post audit and adjustment, which requires the taxpayer to prepare the annual contemporaneous documentation. Practice shows that the method has many shortages; it’s not conducive to the stable operation and long-time development of enterprises. The problem that the multinational companies must face and solve in the operation is how to minimize the impact and risk caused by transfer pricing.Based on the research achievements of many scholars from domestic and oversea, the article analyzes problems on the view of multinational management;elaborates the development situation of advance pricing arrangements system in United State,Korea and our country; compares the advance pricing arrangements between the two countries of China and Korea. Meanwhile, it makes the company of UNION STEEL CHINA"as a case, combines the theory with practice to show that the advance pricing arrangements is not only the inevitable trend of the development of the transfer pricing, but also the inevitable choice for a balanced distribution of the related main interests. Finally, the article gives the advice and strategy for the development and modification of advance pricing arrangements in our country.