Regulatory Issues and Recommendations on Transfer Pricing Tax Avoidance by Multinational Corporations

Abstract

In recent years, with the continuous development of the global economy, multinational corporations allocate resources in various ways to reduce the overall tax burden of the group to achieve the business goal of profit maximization. The transfer pricing method is one of the most common international tax avoidances means used by multinational corporations. Although transfer pricing tax avoidance does not constitute an illegal act in form, in substance, it causes serious capital loss in the host country and infringes on the tax sovereignty of the host country. However, there are still many research gaps in international anti-avoidance regulation, so it is necessary to analyze and recommend the regulation of transfer pricing tax avoidance by multinational companies. This paper introduces a typical case of transfer pricing tax avoidance by Apple, introduces the principles and hazards of transfer pricing tax avoidance, and analyzes the current situation and shortcomings of transfer pricing tax avoidance regulation from three levels: multinational corporations, home countries, and host countries, and then propose suggestions to improve the regulation at the national, multinational corporation and social management levels.