Article 1
Analysis on Tax Planning of Multinational Corporations
[Abstract] This paper first analyzes the causes of tax planning of multinational companies, and from a related perspective, combined with the author's work practice in multinational companies, analyzes the different tax planning methods of multinational companies, and finally puts forward some suggestions to strengthen tax planning of domestic multinational companies, hoping to help tax planning of domestic multinational companies on the international stage.
[Keywords:] multinational corporations; Tax planning; Simple analysis
Over the past 30 years of reform and opening up, China enterprises have gradually gone abroad and occupied a decisive position in the world economy. The internationalization of enterprise management will inevitably lead to the internationalization of taxation. Therefore, it is an important task for multinational companies in China to study the differences of tax revenue among countries and make tax planning in a legal way in order to reduce tax burden, save enterprise costs and participate in international competition more favorably.
1 Motivation of Tax Planning of Multinational Corporations
1. 1 Analysis of the external causes of tax planning of multinational corporations
Multinational companies, also known as international companies or multinational companies, have their production and business activities all over many countries, and many countries have their branches. Due to the tax differences in different countries or regions, compared with a single domestic company, multinational companies have innate external motives for tax planning, which are mainly determined by the following five aspects:
First, the tax rate policy is different. For example, some developed countries in Europe have tax rates above 50%, while some developing countries, including China, often use lower tax rates to attract foreign investment, while other tax havens have zero tax rates. Therefore, the difference of tax rates often becomes an important factor for multinational companies to consider when investing. Secondly, there are differences in tax payment methods in different countries. When calculating taxable income, the provisions of different countries on tax items are often very different. Third, the difference of tax administration efficiency. Iv. Differences in tax policies among countries. Avoidance of double taxation agreements refer to bilateral tax agreements signed between countries on the basis of the same income and according to the principle of equality and reciprocity in order to avoid and eliminate double taxation on the same taxpayer. Avoid international differences in double taxation methods. Fifth, the differences between taxpayers and * * * collection methods, such as residents' jurisdiction collection and regional jurisdiction collection.
1.2 Analysis of Internal Factors of Tax Planning of Multinational Corporations
In order to maximize profits, multinational companies will try their best to reduce tax burden and reduce enterprise costs. Therefore, from the perspective of their own goals, reasonable tax avoidance and overall tax planning are also issues that multinational companies must consider in financial management.
2 Main methods of tax planning of multinational corporations
1 Choose a favorable place for business investment. On the one hand, different countries have different tax systems and policies, and their tax burden levels are also different. At the same time, various countries also have various preferential tax policies. Well-known multinational enterprises choose countries and regions with more tax incentives to invest, so as to benefit for a long time, obtain higher return on investment and improve their competitiveness in the international market. For example, in the 30 years before China's reform and opening-up, various incentive policies, including tax rebates, were successively introduced from the central government to the local governments. By 20 1 1, more than 470 fortune 500 enterprises have settled in China, and the state has played a great role in attracting foreign investment from the tax policy. At present, there are various special economic zones with preferential tax policies in the world. These areas are the first choice for multinational investors to invest, such as Cayman Islands and Bermuda, and there are no personal income tax, corporate income tax and net property tax, inheritance tax and gift tax. Another example is China and Hongkong, countries and regions that are tax-free for income or general property from abroad; There are also special preferential policies for foreign investors in the tax system, such as Britain and Ireland. First, multinational companies transit through their headquarters companies located in tax havens, and the whole company reflects its profits in tax-free or low-tax tax havens, thus achieving the goal of reducing the overall tax burden; Second, through the establishment of international holding companies, international trust companies, international finance companies, holding insurance companies, international investment companies, etc. For tax planning, you can get the benefit of paying less withholding tax.
2. Choose favorable taxpayers. There are two organizational forms of transnational corporations' foreign direct investment: subsidiaries and branches. A branch is a branch that does not have the qualification of an independent legal person and cannot bear legal responsibilities independently. All business activities should be carried out under the authorization of the parent company, and the consequences and responsibilities of the behavior should be borne by the parent company, which usually does not establish accounts independently. If you can't sign a business activity contract independently, a separate external guarantee is invalid. To put it bluntly, a branch office is like an office, and all rights and obligations must be borne by the parent company. A subsidiary is a subject of civil rights with independent legal personality, which is controlled or shared by the parent company. A subsidiary can conduct business activities independently and bear legal responsibilities, and its legal subject status is the same as that of the parent company. However, the parent company is a shareholder of the subsidiary, and the parent company exercises the right to operate and enjoys the rights and obligations of shareholders. There are great differences between these two organizational forms in terms of tax payment, and multinational companies should compare and choose these two organizational forms according to the specific conditions of the investing countries.
In addition, many countries tax the profits of permanent establishments, that is, fixed places where companies carry out all or part of their business, including management places, branches, offices, factories and workplaces. At present, it has become the standard for many contracting States to judge whether to tax the profits of non-resident enterprises. For transnational operations, it is more important to avoid setting up permanent institutions and undertaking limited tax obligations in non-resident countries, especially when the tax rate in non-resident countries is higher than that in resident countries. Therefore, multinational enterprises can realize tax exemption in non-resident countries through goods storage, inventory management, goods procurement, advertising, information provision or other auxiliary business activities instead of setting up permanent institutions.
3. Choose favorable business practices. Transfer pricing means that in international tax affairs, interested parties set prices artificially in transactions, rather than independent parties set prices in a fair market according to the principle of normal transactions. Countries all over the world have taken corresponding anti-tax avoidance measures against transfer pricing tax avoidance. Therefore, the rational use of transfer pricing to choose the business behavior that is beneficial to tax planning needs to be carried out under the premise of observing the laws and policies of various countries, and the formulation process of transfer pricing is a very rigorous and complicated work. At present, all countries regard transfer pricing for tax avoidance as the primary goal of anti-tax avoidance and formulate transfer pricing tax system, which brings difficulties to multinational enterprises to use transfer pricing for international tax planning. For example, according to a recent report by Xinhua News Agency, China cooperated with multinational tax authorities to investigate "the first major case of anti-tax avoidance in China", and the China subsidiary of M Company, a world-renowned company, paid back 840 million yuan in tax and interest, about 65.438+0.4 billion US dollars, which will increase the tax revenue for China by more than 65.438+0 billion yuan every year in the future. However, in order to attract foreign investment, increase employment and develop domestic economy, the provisions and specific implementation of transfer pricing tax system are often inconsistent, thus creating more flexible space for multinational enterprises to use transfer pricing for tax planning.
3 Suggestions on Tax Planning of Multinational Corporations in China
The first is a wide perspective. It is necessary to have a global perspective and have a deep understanding of tax systems, tax policies and related information in various countries. The tax systems of countries around the world are different, including tax types, tax rates, tax calculation methods, etc., and the tax payment relationship is also very complicated. In addition, the operating conditions, income types, business contents, tax payment places and national conditions including politics, economy, science and technology, culture and folk customs of various countries all affect the business activities of enterprises, and then affect the tax planning of enterprises.
The second is multi-angle. In tax planning, we should stand from multiple angles and prepare multiple alternatives. Multinational companies should comprehensively analyze the situation, one by one, from different angles, combined with time and space factors, and choose the most favorable scheme.
The third is all-round. We should also have an overall concept in transnational tax planning. Multinational companies should look at this problem from all sides. Pursue the overall tax burden minimization, and avoid excessively pursuing the tax burden minimization of a country or a project and ignoring the overall tax burden.
The fourth is to focus on the long term. Multinational companies should have a long-term concept in tax planning. Long-term interests should be considered in tax planning, and long-term interests should not be ignored simply for the sake of pursuing immediate interests. Multinational companies in China should make a long-term and overall tax planning plan.
The fifth is to lay a solid foundation. For multinational companies, we should pay attention to the training of internal talents, lay a solid foundation and do a good job in internal strength. First of all, we should cultivate a group of financial management talents who understand finance and taxation, foreign languages and computers, and provide the necessary conditions for the company to carry out international tax planning.
To sum up, multinational companies in China should pay special attention to tax planning, study tax planning in advance and integrate it into business strategies and company business plans, learn from the mature experience of foreign multinational companies, and choose tax planning schemes suitable for their own characteristics to achieve the goal of maximizing operating income.
the second
Research on Investment Decision of Multinational Corporation R&D in China
I. Introduction
Since China joined the World Trade Organization, it has played an increasingly important role in the international market. Market-oriented multinational companies have invested in R&D in China. Based on China and looking around the world, establishing R&D center in China has become an important part of multinational corporations' globalization strategy. Since 1994, when the first R&D center set up by a multinational company in China was born, the number of R&D centers set up by multinational companies in China has increased rapidly, with an upward trend year by year. Starting from the year r & shown in figure 1; D From the number of institutions, it can be seen that the R&D investment of multinational companies in China experienced a rapid growth stage before 2002, and entered a stable growth stage after 2002. According to the relevant special materials of the Ministry of Commerce, R & ampd multinational company established in China1997; D The total number of institutions is 24, which increased to more than 1400 in 20 12, nearly 58 times that of 1997. These R&D institutions are mainly distributed in the eastern coastal cities of China, especially in developed cities such as Beijing, Shanghai, Guangzhou and Shenzhen. At present, there are more than 1800 R&D centers of foreign-funded enterprises operating in China, and the contents involved in these R&D centers are further extended to basic and groundbreaking R&D, indicating that the R&D investment strategy of multinational companies in China has undergone profound changes, from the original applied research to basic research, which embodies the "global strategy" of multinational companies.
According to Wang Zhile's "China Report of Multinational Corporations in 20 12" on the investment projects of Fortune 500 companies in China, by 20 12, almost all Fortune 500 companies had invested or set up institutions in China, among which R&D investment was mainly concentrated in high-tech industries. The entry of multinational companies has changed the industrial structure of China, promoted the upgrading of the industrial structure of China and improved the overall level of the industry. The most important thing is to transfer the oligopoly market structure to China. In 2009, Liu believed that oligopolistic enterprises could surpass their competitors only by updating their products and technologies. Therefore, multinational companies' investment in China has the characteristics of "strategic follow-up", especially in daily necessities, fast food, IT, beverages, photosensitive materials and other industries. In recent years, multinational companies have gradually begun to pay attention to the central and western regions of China. 20 13 Fortune Global Forum was held in Chengdu, which attracted more than 600 politicians and entrepreneurs from Fortune 500 companies, stimulated the enthusiasm of Fortune 500 companies to invest in the west, and made the west of China an important area of global concern.
The R&D investment of multinational companies in China is not only very different in industry, but also significantly different in regional distribution, and the spatial distribution is extremely unbalanced. There are differences in infrastructure, investment environment, market competition, human resources, R&D strength and related policies in different regions. Understanding the investment purpose, influencing factors and regional differences of multinational companies can provide a basis for China to formulate differentiated policies and regulations. Therefore, it is necessary to further analyze the R&D investment decisions of multinational companies in China and their regional differences. The structure of this article is as follows:
The second part is literature review, the third part establishes duopoly competition model and makes relevant analysis, and the fourth part is the conclusion of the article.
Second, literature review
Since 1990s, the R&D investment of multinational corporations in China has attracted the attention of many scholars. The research of domestic scholars basically focuses on analyzing the motivation, location and industry choice of multinational companies investing in China. Some scholars have analyzed the influencing factors of attracting R&D investment in China: 200 1 Lan Xue and others think that the R&D investment of multinational companies in China is mainly to hire local researchers, develop local products and reduce R&D; D cost. Li Jie analyzed in 2005 that the investment environment and scientific research human resources in R&D area are the main factors considered by multinational companies. In 2009, Cui Xinjian and Ji Jianbao believed that the R& investment of multinational companies was mainly to support their marketing and production in China. Tang et al. 20 12 analysis from the national level shows that the country's technological innovation ability, human capital and infrastructure are important factors to attract investment. From the perspective of industry, the empirical analysis of 20 1 1 by Cui Xinjian and others shows that the industrial factors of R&D investment by multinational companies include market size, technological innovation and FDI distribution, competitors, industrial human resources and policies. Other scholars from multinational corporations to R& D in China; Internal motivation analysis of D investment: In 2002, Chen obtained R& to analyze the enterprise through a game model; D investment is related to information spillover of enterprises and market institutions. In 2005, Huang Xinfei and Chen established a duopoly model to analyze the influencing factors of multinational companies' investment in China. The existing research has two defects: first, the implicit assumption of their research is that the products are homogeneous, ignoring the differences of products. Second, the existing domestic research has not summed up the differences between the East and the West. In this paper, a duopoly competition model of heterogeneous products is established. The research shows that multinational companies should consider the factors of R&D investment, and at the same time, the differences between different regions are analyzed with relevant data.
Thirdly, model establishment and correlation analysis.
Game analysis
Multinational companies from two developed countries, 1 and 2, have invested in a branch factory in the host country B. Assuming that only these two companies supply the industries of country B, and their products are replaceable, these two companies decide whether to invest in R&D in country B. Before R&D investment, the market in country B is Q, and the two companies allocate the markets according to a certain proportion. % salary% [,of which 0