International transfer pricing for business operations in China : inducements, regulation and practice
Document Type
Journal article
Source Publication
Journal of Business Finance and Accounting
Publication Date
10-1-1997
Volume
24
Issue
9-10
First Page
1269
Last Page
1289
Publisher
Wiley-Blackwell Publishing Ltd.
Keywords
international transfer pricing; inducements; over-pricing of imports; under-pricing of exports; China
Abstract
This paper provides an empirical analysis of international transfer pricing in the People's Republic of China. The examination of the business environment in China reveals a mixed inducement for transfer pricing decisions by foreign investment enterprises (FIEs). The legislation on transfer pricing in China is similar to that of its major trading partners. Competition among local governments for foreign investment, inadequate resources for tax enforcement, and inadequate documentation by taxpayers hinder tax audits on transfer pricing. An analysis of aggregate import and export data does not support the allegation that, in general, FIEs shift profits out of China by over-pricing their imports and under-pricing their exports. However, there was some evidence of outward income-shifting in certain key sectors.
DOI
10.1111/1468-5957.t01-1-00162
Print ISSN
0306686X
E-ISSN
14685957
Publisher Statement
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Hung, K., & Chow, L. (1997). International transfer pricing for business operations in China: Inducements, regulation and practice. Journal of Business Finance & Accounting, 24(9-10), 1269-1289. doi: 10.1111/1468-5957.t01-1-00162