Study On DW Group's Related Transaction Transfer Pricing Planning Strategy

Multinational enterprises are the most important economic entities in promoting theworldwide economic development. Within the development of the global economic environment, China joined the WTO, and more and more oversea enterprises invest in China,whereas growingly Chinese corporations invest oversea. Among the administration arrangement of those multinational enterprises, the transaction arrangement of the related transactions is of great importance for determining the profit distribution among the value chain corporations, which may influence the operation benefit and resource allocation.Moreover, as multinational enterprises attempting to avoid tax burden by taking advantage of the difference among tax policies of different countries, some of the extreme arrangements violated the foundation of the related national tax policies, which would be supervised by international tax departments or even arouse tax inspection. Thus, designing rational related transaction pricing arrangement, in order to decrease tax burden, fit the related national tax policy and avoid the risk of being inspected by tax department, is a vital task for multinational enterprises.This paper was composed of five chapters. The first chapter mainly demonstrated the background of the related transaction pricing arrangement(i.e. transfer pricing) and the current condition of the global related transaction pricing policy, and the main purpose of the study, which is how to re-design a rational related transaction pricing arrangement under the basic economic principle and tax regulation, for decreasing transfer pricing risks and increasing tax efficiency. The second chapter focused on the fundamental definitions,principles, and methods of transfer pricing and related theories, introduced related experience for related transaction pricing arrangement both domestic and overseas. The third chapter introduced the related transaction arrangement of DW Group and analyzed potential transfer pricing risks. The fourth chapter was based on the earlier analysis, re-arranged the inner related transactions of DW group by organizing the transfer pricing system, for the aims of decreasing transfer pricing risks and increasing tax efficiency. The final chapter concluded the results and enhanced the significance of whole paper.This paper is creative and reliable. The logic method of this paper is discovers the problem, does research and finds evidence, analyzes and resolves the problem. Through the research of the theory and examples of multinational enterprises related transactionarrangement, the paper arranges the transfer pricing system of the DW group by qualitative and quantitative methods. Normally, the research of related transaction pricing arrangement is limited to qualitative analysis. However, this paper used the method of quantitative analysis and determines the deserved profit level of each entities under the transfer pricing arrangement, which is an important reference for the operation of the project, and could be commonly referred to other projects as well.