In international trade, transfer pricing refers to when a multinational company transfers goods, services, intangible assets or funds between its affiliated companies, it affects the profit distribution and tax burden of each affiliated company by setting internal transaction prices. Rational use of price transfer can help companies achieve tax optimization, but they must comply with the laws and regulations of various countries, especially the "Transfer Pricing Guidelines" issued by the OECD and the requirements of national tax authorities. Here are some common strategies and precautions： --- ### 1. **Reasonable setting of internal transaction prices** -**Cost addition method**: Add a certain percentage of profit on the basis of cost, which is suitable for production-oriented enterprises. -**Comparable uncontrolled price method**: Refer to the prices of independent third parties in similar transactions to ensure reasonable pricing. -**Resale price method**: Based on the resale price minus the reasonable profit, it is applicable to distribution companies. -**Profit division method**: Distribute profits according to the contribution of each affiliated company to the overall profit, which is applicable to complex transactions. -**Transaction net profit method**: Determine the price based on the level of net profit of comparable transactions. --- ### 2. **Take advantage of low-tax areas** -Set up subsidiaries in low-tax countries or regions and transfer profits to these regions through price transfers, thereby reducing the overall tax burden. -For example, locate intellectual property rights, R&D centers, or holding companies in low-tax areas, and transfer profits through royalties or service fees. --- ### 3. **Optimize the supply chain structure** -Locate high-profit links (such as R&D and brand management) in low-tax areas, while low-profit links (such as production and sales) are located in high-tax areas. -Through internal transaction price adjustments, profits are concentrated in low-tax areas. --- ### 4. **Reasonable allocation of costs and expenses** -Through the group's internal service agreement, the costs of the headquarters or regional center (such as management and technical support) are reasonably apportioned to each subsidiary. - Ensure that the apportionment basis is reasonable and complies with the principle of independent transactions. --- ### 5. **Use of tax treaties** - Avoid double taxation or enjoy preferential tax rates by using tax treaties between different countries. -For example, an intermediate holding company is established in the country of agreement to reduce withholding taxes on dividends, interest or royalties. --- ### 6. **Prepare transfer pricing documents** -According to the requirements of each country, prepare complete transfer pricing documents, including master files, local files and country reports. - Ensure that the documents can prove that the internal transaction price complies with the principle of independent transaction in response to the review by the tax authorities. --- ### 7. **Avoid tax risks** -**Abide by the principle of independent trading**: Ensure that the internal transaction price is consistent with the transaction price between independent third parties. -**Pay attention to the BEPS Action Plan**: Comply with the OECD's Base erosion and Profit Transfer (BEPS) Action Plan to avoid being identified as tax avoidance. -**Regularly review the pricing strategy**: Adjust the pricing strategy according to the economic environment, regulatory changes and business models. --- ### 8. **Seek professional support** -Hire tax consultants, accountants or lawyers to help companies develop compliance transfer pricing strategies. -Maintain communication with tax authorities to ensure transparency and compliance with pricing strategies. --- ### Precautions -**Tax compliance**: Tax authorities in various countries have increasingly stringent supervision of transfer pricing, and companies need to ensure that their pricing strategies comply with local regulations. -**Information disclosure**: Some countries require companies to disclose related-party transaction information, and companies need to make relevant preparations. -**Potential risks**: Unreasonable price transfers may lead to tax audits, fines and even double taxation. --- In short, through the rational use of price transfer, enterprises can achieve tax optimization under the premise of compliance, but they must operate cautiously to avoid violating relevant laws and regulations.