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Related enterprises transfer pricing tax management difficulties and Countermeasures

Author: YangChunHua ZhouShaoYan From: www.yourpaper.net Posted: 2010-06-16 14:03:23 Read:
[Keywords]     related enterprises; transfer pricing;   management problems; Countermeasures
[Abstract] related enterprises transfer pricing is a main way of associated enterprises avoidance, not only in the multinational enterprise, but also in the presence of a large number of domestic related enterprises, has caused great difficulties to the local tax management in our country.In this paper, the definition of the associated enterprises, transfer pricing motive, method, model and hazard analysis of transfer pricing between affiliated enterprises to the local tax management difficulties, and puts forward the corresponding countermeasures.
Transfer pricing is the goods, sales association between enterprises to provide services, the transfer of intangible asset prices and provide the loan interest and develop.With the development of economy in China, the eastern coastal area, the accumulation of a large number of capital and business experience, investment is more regional and more formal.The domestic related enterprises a lot of emerge as the times require, they use the difference of tax policy in various areas, making the transfer price to avoid tax, reduce the overall tax burden, bring a lot of problems to the local tax management.
Define a, associated enterprises
The definition of affiliated enterprises is the starting point of transfer pricing tax system."UN Model" and "the OECD Model" is the management, control and capital as the basis of affiliated enterprises.Based on these two models, and combined with the actual situation of their own countries, identification of associated enterprises to make specific provisions.
(a) China's "company law" does not have the associated enterprises provisions.While "administration law", "enterprise income tax law" and "foreign investment enterprise and foreign enterprise income tax law" stipulates: "the association enterprise refers to one of the following relationships with companies, enterprises and other economic organizations: 1 in capital, management, marketing, direct or indirect ownership or control; 2, directly or indirectly, with third who owns or controls; 3 other associated in the interests of the relationship."Transactions between associated enterprises "tax management regulations" has made a further explanation: "1 are directly or indirectly holds shares the sum of one of 25% or more; 2 direct or indirect and is owned by third or control shares reached 25% or more; 3 enterprises and other enterprises credit funds enterprises accounted for 50% or more of the total funds, borrowing or enterprise 10% is secured by another enterprise; 4 enterprise directors or managers and other senior management personnel more than half or a managing director is appointed by the other enterprises; 5 the production and business activities of enterprises must be provided by another enterprise charter rights (including industrial property rights and proprietary technology, etc.) to the normal production and operation of enterprises; 6, the purchase of raw materials, parts and accessories (including prices and trading conditions) by another enterprise or supply; 7 enterprise products or sales of goods (including prices and trading conditions) is controlled by another enterprise; 8 production and operation of enterprises, trading with other benefits to control the associated relationships, including family, kinship etc.."In recent years, from the Fujian Provincial Bureau of inspection department of the real estate industry is suspected of tax evasion case audit can be seen, some enterprises is to carry out tax avoidance activities through affiliated enterprises.
(two) the United States identification of associated enterprises has the characteristics as follows: 1 using the standard: to jointly operate the relevant parties for the standard, that is "substance over form" principle of "control".The 2 legislative forms: identification of associated enterprises only made the principles in general, and the considerable privileges to the Minister of Finance and its authorized personnel.As long as there is transfer pricing in practice, tax departments can be made to have controlling relationship hypothesis according to tax law, taxpayers disaffected, can put forward the evidence, the burden of proof.3 applies transaction object: objects of transfer pricing tax system including domestic trade and international trade.
As you can see, our identification of affiliated enterprise is based on the principle provisions and the use of examples on the list, the intention of the legislation is mainly for multinational enterprises, but also for the domestic related enterprises.In practice, the tax authorities are more concerned about the multinational enterprise, and the domestic related enterprises transfer pricing problem due to a late start, the amount is the former to be small, often easy to be ignored.
Two, transfer pricing between affiliated enterprises to the local tax levy difficult
Transfer pricing tax avoidance is affiliated enterprises in economic transactions, not by the independent enterprise (non - affiliated enterprises) between the normal market transaction price of transactions, but in the internal price determined by man-made settlement, through the transfer of income, profits and artificially arranged a company's profit or loss, so as to reduce or remove the tax burden of companies overall.
(a) the domestic related enterprises established the transfer pricing motive
1, can reduce or delay payment of enterprise income tax.China's "enterprise income tax law" provisions, the proportional tax rate of enterprise income tax of 33%; also provides two suits of care tax rate, namely on the annual taxable income in 30000 yuan (including 30000 yuan) of the enterprises, shall be taxed at 18%, the annual taxable income in 100000 yuan (including 100000 yuan) to below 30000 yuan enterprise, at the reduced tax rate of 27%.Affiliated enterprises through transfer pricing, internal enterprises to reduce the amount of taxable income to lower tax rates applicable to the class, can also occur through transfer pricing tax time delay obligations (i.e. loan payment time).
2, can be exempted from or less levy land value-added tax.Land value-added tax by four to progressive tax rates, the lowest rate of 30%, the highest rate of 60%.Land value-added tax taxpayers constructing ordinary standard residential sale, the appreciation amount does not exceed the deductible amount for 20% (including 20%) shall be exempted from land value-added tax.Land value-added tax by transfer pricing, internal transfer of profits, to sign or not tax.
3, related enterprises transfer pricing to achieve the overall tax burden minimum.Associated enterprises make use of high domestic tax area and low tax area tax and preferential tax differences, reduce the high tax district tax oppression, evade the crucial point in the tax, to achieve the overall tax burden minimum.All regions in China have great differences in tax, levying taxes, tax rates can be selected by the selection and the collection of related enterprises, tax avoidance is a great incentive.
(two) transfer pricing in a variety of forms, the tax levy has caused great difficulties to the place.
The 1 transfer pricing of tangible property.Affiliated enterprises of raw materials, semi-finished products and finished products (including machinery equipment and production lines) transfer implementation of "low into higher or high into the lower", the income to transfer to the tax burden low enterprise, and the expenses as much as possible transfer to high business tax.Tax authorities can according to the new "tax collection and management law" provisions of related enterprises in accordance with the price between independent enterprises and then sold to unrelated third adjust prices, but many enterprises pricing adjustments no reference standard, the existing tax law of transfer pricing adjustment is not than the specified feasible, difficult to operate in practice.For example, some pharmaceutical companies will use its manufacturing raw materials pricing complexity, tax authorities grasp of market prices is difficult, the transfer of raw materials, semi-finished products of "high into the lower and higher low" in measures for tax avoidance.If the real estate transaction, each real estate enterprise development of real estate is the one and only, although the same lot the same type of same structure of real estate for reference, the reference standard is not the only, because real estate prices in addition to the effects of location, type and structure, but also restricted by price, cost and other real estate development factors.
The 2 transfer pricing of intangible assets.Association between enterprise intangible assets among affiliated enterprises deliberately transfer of land use rights, is typical of the transfer pricing, tax authorities generally difficult to detect and adjust.Such as: the government allocated land use right Fuzhou real estate development company, it will block the transfer to its wholly owned subsidiary under the name of the real estate development, value added in the scope of the land value-added tax, land value-added tax evasion.
The 3 transfer pricing labor costs.Affiliated enterprises often occur between the internal mutual provision of services, if a lot of labor cost is transferred to a company's accounts, the company appears weak Suyin, will can be exempt from income tax, according to China's "enterprise income tax law" can also be used in the next five years to make up for the loss of profits.
Transfer pricing 4 lease of fixed assets.Correlation between enterprises also frequent the fixed assets of the rental, lease has not only the financing function, also can be used for tax avoidance.For example, high tax areas company borrows money to buy equipment, at the lowest price to rent to affiliated enterprises low tax jurisdictions, the latter with high rent to affiliated enterprises a high tax areas, rules can use the rental fee can be deducted in the enterprise income tax and taxable income in the tax avoidance, reduce financing cost.For example, a real estate development company in Xiamen, in order to avoid tax policy, originally belonging to the rental income to the property management fees charged by the name, rent is low, and the same grade office rentals are up to 42.8%, as the rent to management fees charged, the charging of the property management fee is high, is 2.29 times the same grade office.
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