Title

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

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

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Full-text Version

Publisher’s Version

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