The Research Of Transfer Pricing Adjustment Methods

With the process of globalization, the phenomenon of the multinational companies using transfer pricing for tax evasion is dramatically increasing. In order to maximize the profit, meet the global strategies, the multinationals intend to transfer their profit from high-taxation country to low-taxation country by using transfer pricing. How to protect the country’s interest and haw to handle this situation? We should make the adjustments on the transfer pricing based on the concept of‘Arm’s Length Principle’. The better understanding of transfer pricing and adjustment methods, as well the advantages and disadvantages of adjustment methods, the better maintain the country’s interest. Currently the popular transfer pricing adjustment methods include Comparable uncontrolled price method (CUP),Resale price method (RPM), Cost plus method (CPM), Profit split method (PSM), Transactional net margin method (TNMM), Comparable profit method (CPM) and Advance pricing agreement (APA), every adjustment method has own advantages and disadvantages. The comprehensive comparison, analysis and more cases study made in this paper and set up a point to regard TNMM and CPM as a same one.