With the rapid development and expansion of the multi-companies in theworld, the issues brought from multi-national companies are becoming thefocus of the government departments throughout the world. And one of theobvious problems is that overusing and misusing transfer pricing tomanipulate the profits within all the subsidies all over the world, thusrealizing the operating objectives of the profit maximization of the wholegroup.The thesis firstly analyzed the current situation and issues of multi-national companies’ investments in China, as well as generally described thenew opportunities from the establishment of Shanghai Free Trade Zone.Secondly, the thesis introduced the transfer pricing theory on the basis ofmulti-national companies, including the cause, strategic mode, and validationmethod. Furthermore, we emphasized on the transferring pricingmethodology of OECD, and China has made the research on it since the yearof2009. From the above introduction and explanation, we concluded thepotential risks and risk averse methods, as well as the transfer pricing issueslocated in China.Thirdly, the thesis starting from the profit maximization impact factors oftransfer pricing in China, analyzed the profit maximization impact factors to the single multi-national company and all the multi-national companies as thewhole, using the partial derivatives method, as well as the linear regressionmethods respectively, thus concluded that the final impacted factors oftransfer pricing are the direct investment from overseas companies, and theshareholder percentage from overseas investors. Moreover, we used theFamie China Company case to validate our conclusion.Finally, based on the above analysis of transfer pricing theory and casestudy, we analyzed the impact on Shanghai Free Trade Zone, from thetransfer pricing of the multi-national companies, and then proposed theconstructive suggestions to the Shanghai Free Trade Zone in the early stageof establishment. |