The Differences of the Transfer Pricing Tax Audit System between Taiwan and Mainland China

• Main Authors: Wei Min Chuang, 魏敏全
• Other Authors: 莊義雄
• Format: Others
• Language: zh-TW
• Published: 2005
• Online Access: http://ndltd.ncl.edu.tw/handle/84440278125561582530

碩士 === 長榮大學 === 經營管理研究所 === 93 === Abstract Due to world trade quickly growing every country creates their own Transfer Pricing in order to protect their taxes. Companies attempt to avoid tax by using Transfer Pricing rules. In order to prevent companies from avoiding tax, governments set up a Transfer Pricing Tax Audit System to regulate abusive companies. Since the economy of Mainland China is rapidly growing, the Chinese government tries to lure Taiwanese companies to establish opera tings there by offering tax breaks (tax reductions) and cheaper labor. However, Mainland China has already made the relative Transfer Pricing rules. Therefore, this thesis conducts research on Transfer Pricing for the Taiwanese Companies who have operations in Mainland China. The first section of this thesis will discuss the elements of a transfer pricing tax audit strategies and related transfer pricing rules between Mainland China and Taiwan. Next, this paper introduces the content of Transfer Pricing between China and Taiwan. Furthermore, we will examine and analyze the advantages and disadvantages between Taiwan and China. Finally, we inquire CPAs’ and Taiwanese business owners’ suggestions by sending out the questionnaires. Analyzing the questionnaires and providing the concrete suggestions are as follows. For those who are interested in this Pricing Transfer between Mainland China and Taiwan, the questionnaires are developed to provide the following concrete suggestions: For Taiwan: a. The directly related business owners need to report tax accurately. b. The indirectly related business owners need to provide the proof by documentation. c. The application of advance pricing agreements need to have looser restrictions. d. CPA’s need to promptly set up audit transfer pricing rules. e. Tax pricing agreements must be promptly established. For Mainland China: a. Focus on the substance rather than formation to set up related companies. b. Setting up transfer pricing adjustment methods. c. Setting up effective labor rules. d. Setting up transformation of incorporeal capital’s agreement. e. Regulating tax payer’s document preparation.