Transfer Pricing and Tax Management for Foreign-Invested Enterprises

Author: He Yurun
Publisher:
Publish Date: 2006-12-01
Features: This book proposes tax supervision strategies tailored to the characteristics of foreign-invested enterprises in China. It suggests that China's foreign-related tax supervision system should be a multi-level, diversified, and comprehensive one. At the macro level:
First, it is necessary to increase the correlation between foreign-invested enterprises and their Chinese cooperative partners;
Second, it is essential to achieve information sharing regarding transfer pricing supervision among relevant departments such as finance, customs, and taxation. In policy formulation, coordination and consistency should be ensured, while in operational information, "unified database operation" should be implemented across multiple departments;
Third, better coordination between tax authorities and foreign-invested enterprises should be fostered;
Last, collaboration with tax authorities worldwide should be strengthened, establishing an intelligence information network among participating countries.
At the micro level, the book advocates for two approaches:
First, studying tax supervision from the perspective of accounting supervision, reflecting the reporting responsibility of accounting;
Second, flexibly applying the best methods principle, providing comparable information in a timely manner, and formulating policies tailored to the characteristics of foreign-invested enterprises in China.
Overall, the book comprehensively integrates relevant theories on transfer pricing from economics, law, accounting, and management. It offers a unique research perspective, rigorous logic, and a thorough analysis of issues. Additionally, the book examines the relationship between the investment scale of foreign-invested enterprises, tax rate differences, the equity structure of Chinese-foreign cooperative partnerships, the selection of transfer pricing methods, and transfer pricing motivations. It highlights the inevitability of tax leakage in China's foreign-related tax system and suggests that strengthening accounting reporting responsibility is a beneficial approach to implementing supervision. These studies demonstrate the uniqueness of transfer pricing in China's foreign-invested enterprises and, to some extent, enrich the fundamental theories of international transfer pricing.