Handbook Abstract ProposalLiterature Review 留学生论文翻译 Annotated Bibliographies Methodology 留学生论文润色 出国留学论文 Reference
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Literature Review范例(跨国企业转让定价研究文献综述)

2. Literature Review

In empirical researches, Ernst and Young surveyed 393 multinational enterprises in 12 countries in 1997, the results showed that: driving factors of parent companies to carry out transfer pricing are not only tax optimisation, other factors are also important in a larger extent (E&Y, 1997). In 2002, Ernst and Young surveyed more than 200 multinational enterprises of 22 countries’ again, and this investigation showed that transfer pricing is the main problem of international tax revenue at all time (E&Y, 2002)

2.1 Basic Concepts and Functions of Transfer Pricing

2.1.1 The Basic Concept of Transfer Pricing
This so-called transfer pricing, refers to internal transaction value of a group’s internal institutions or between affiliated enterprises which provide product, service and property mutually. According to Model Convention for the Avoidance of Double Taxation with Respect to Taxation Income and on Capital of Organisation for Economic Cooperation and Development (2003), the definition of transfer pricing of multinational enterprises refers to prices when affiliated enterprises of multinational companies transfer good, intangible assets or providing services. At present, the concept has been accepted by most countries’ tax authorities (including customs).

The Organisation for Economic Cooperation and Development (OECD) defined many important terms such as “advance pricing” and “arm’s length principle” in OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2009. However, the OECD did not define “transfer pricing” in the Guidelines. It is only in preface of the guidelines paragraph. 11, it refers to “Transfer prices are the prices at which an enterprise transfer physical goods and intangible property or provides services to associated enterprises” (Hardari, 2009. pp32)”. And “transfer pricing issues originally arouse in dealing between associated enterprises operating within the same tax jurisdiction” (OECD, 2009)”. Lipton (1990) once defined transfer price as what is used to describe prices for purchasing or selling goods and services in the affiliates and groups within a multinational enterprises. In order to avoid distortion, prices must be the fair market prices. However, due to various reasons, prices of internal transaction within multinational enterprises may be higher or lower than the fair market prices. The method of invoicing is often being used, and this method is also known as the “transfer pricing abuse”.

Transfer pricing can occur within a country, also it can occurs between countries as well. The latter condition refers to two institutions in two countries but within a same legal enterprise (within a multinational company group), that is, corporation with its branches, or two subsidiaries, or two affiliated corporations’ internal prices, which belong to the same enterprise as well.



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