Transfer Pricing
The following is a first attempt at translation. Many hours behind the computer with a trusty dictionary produced the following translation of my professor’s research paper from Chinese to English. This was part of a final project for an International Business Management class at Sun Yat-sen. More in this blog about the school and the MBA program in which I am enrolled. Feel free to make comments on my Chinglish gibberish. I welcome any corrections.
不同控股比例下的国际转移定价模型*
Different Ownership Holding Proportions in International Transfer Price-fixing Models
中山大学岭南学院 胡松华 周韬
Sun Yat-sen University Lingnan College
Hu Songhua and Zhou Tao
内容提要：
Abstract:
Transfer prices are starting to play an important function in the international management of multinational corporations. Corporate tax documents indicate that the driving incentive from a microcosmic level behind expansion of international transfer pricing theoretic models is objective analysis of different ownership holding proportions and dividend distribution ratios. This combined with simulation techniques under variable conditions can yield reasonable transfer pricing options and exceptional transfer pricing strategy.
转移价格在跨国公司的国际经营活动中起着重要的作用。本文从企业税 负驱动机制的微观层面上，扩展国际转移定价的理论模型，客观地分析在不同控股比例和红利分配率情况下转移价格的理性选择；并且运用模拟方法，揭示不同变量条件下的最优转移价格策略。
Key words: transfer price, multinational management, multinational corporation, pricing model
关键词：转移价格 跨国经营 跨国公司 定价模型
一、问题的提出
1. Problem Description
International transfer prices are used when are products transferred internally between a multinational corporation (MNC) and its main internal subsidiaries or between the subsidiaries themselves. Price exchanges are part hard work and part technique. By using transfer pricing, it is possible to reduce a multinational corporation’s management risk, reasonably reduce corporate tax burden, and improve financial benefits. Therefore in a global context, transfer pricing becomes an MNC optimization scheme, resource and an effective instrument for maximizing profit after tax.
国际转移价格是跨国企业内部母子公司或子公司之间转让产品、劳务和技术所采用的交易价格。使用转移价格，可以降低跨国经营风险、合理减少企业税负、提高经济效益。因此，转移价格成为跨国公司在全球范围内优化配置资源、获取最大税后利润的一种特殊的经营管理手段。
Hand in hand with China’s continued high speed development, the country is following a relatively surprising step-by-step adoption of corporate “opening up” for foreign investment strategies. This process is responsible for having formed a large quantity of China’s MNCs. According to national commercial statistics, up until the end of 2004, China had accumulated 8300 foreign direct investment companies accounting for 370 million USD with capital export services expanding to more than 160 countries and regions. Despite this big step in development, China’s MNCs are basically still in a primary growth phase. It is extremely necessary to identify overseas MNC management techniques that can increase China’s own companies’ competitiveness. It is worth studying and researching the appropriate application of transfer pricing rules followed by management in other MNCs.
随着中国经济的持续快速发展，我国有比较优势的企业逐步采取“走出去”的对外投资战略，形成了一大批中国的跨国公司。根据我国商务部统计， 截至2004年底，中国对外直接投资企业累计近8300家，中方投资额370亿美元， 资本输出业务已扩展到160多个国家和地区。尽管有了长足发展，我国的跨国公司基本上还处于成长的初级阶段，很有必要借鉴国外跨国企业的经营方法来提升自己的竞争力，而合理运用转移价格则是跨国经营中值得学习和研究的一项内容。
Joint venture corporations are MNCs that have a particular fundamental international management structure. Since 70% of China’s direct foreign investment has adopted a joint venture structure, choosing a transfer pricing strategy based on ownership proportions becomes a theoretical tool for applying to real corporate problems. Research papers in transfer pricing mention a type of corporate tax burden as the main driver, influenced by the theoretical framework and foundation put forward by Horst and Kant, behind multinational management transfer pricing models. This paper goes deeper into the analysis of different ownership holding proportions, dividend distribution rates, and how to choose transfer prices. It also shows how simulation methods reveal different variable conditions supporting the best transfer pricing strategy. Hopefully by supplying China’s MNCs with precise analysis models and tools that use value estimation equations, it will help companies to reasonably apply transfer pricing methodology.
合资企业是跨国公司进行国际化经营的一种主要形式。由于超过70%的我国对外直接投资采用合资企业的方式，所以，在不同控股比例的条件下如何选择转移定价策略，就成为一个具有理论意义的现实问题。本文将转移价格作为一种企业税负驱动机制，拟以较有影响的郝斯特（Horst）和康特（Kant）的理论框架为基础，构建跨国控股经营的转移定价模型，深入分析在不同控股比例和红利分配率情况下如何选择转移价格，并且运用模拟(Simulation)方法，揭示不同变量条件下的最优转移价格策略，以期为我国跨国公司合理运用转移价格提供一种 严谨的分析模式和具有参考价值的估算方程。
二、跨国公司转移价格的研究综述
2. MNC transfer pricing research summary
In the past several years, international transfer pricing has become a hot issue in multinational management research fields. Chinese and foreign scholars have both published a large number of scholarly journals. For example, Borkowski (2001), Pan Xiangdong and Liao Jinzhong (2001), Wang Zongguang (2002), Clausing (2003), Barelsman & Beetsma (2003), Eldenburg & Pickering (2003), etc. all have discussed different perspectives on MNC transfer pricing characteristics and qualities, especially the effect and influence on international economics and trade.
近些年来，国际转移价格成为跨国经营研究领域的热点问题，国内外学者 发表了大量的学术论文。比如说，Borkowski (2001)、潘向东与廖进中（2001）、王宗光（2002）、Clausing (2003)、Bartelsman & Beetsma (2003)、Eldenburg & Pickering (2003)等从不同的角度探讨了跨国公司运用转移价格的特点和性质、 及其在国际经贸活动中不可忽视的作用和影响。
The earliest period of MNC transfer pricing theoretical research began in the 20th century with initial research in the 1970s by Horst (1971) in his “MNC Theory: Best Acts for Different Tariff and Tax Revenue Regulations” and Copithorne’s 1971 “International Corporate Transfer Pricing and Government Policy”. Horst, in his thesis established a standard MNC transfer pricing model. The model analyzes an imperfect competition scenario by considering all of a parent company’s country customs duties and tax rate differences and then implements the model within a group of trading MNCs. If companies adopt transfer pricing strategies, they are likely to set either the highest or the lowest transfer prices in order to control the tax-before-profit in different countries (confirmation), intentionally achieving the largest after-tax profits. Moreover upper and lower limits of transfer pricing are “outside variables”. Due to the fact that these outside factors of a corporation are all determined externally, the highest transfer prices actually end up determining the real open-market prices and the lowest transfer prices represent the lower limits of production costs. Differing from Horst, Copithorne established a contrasting MNC transfer pricing model. Subsequently, Samuelson (1982) and Eden (1985) demonstrated the “inner nature” of transfer pricing upper and lower limits. MNC’s can enact regulating transfer pricing strategies that influence sales and thereby affect changes in production costs and open market prices. Observing these changes is essential to maximizing MNC benefits. Later, Prusa (1990) researched asymmetric data to develop ideal transfer pricing decision-making techniques. Then, Vidal (2001) further developed transfer pricing policy by analyzing decision-making variables to introduce a global supply chain model. That model expounded on transfer pricing processes for international resource management.
跨国公司转移价格的早期理论研究兴起于20世纪70年代初期，代表作是郝斯特（Horst,1971）的“跨国公司理论：不同关税和税收规则下的最佳行为”，和考比松（Copithorne, 1971）的“国际企业转移价格和政府对策”。郝斯特在他的论文里建立了关于水平型跨国公司的转移价格模型，该模型分析一个不完全竞争企业在两个不同国家同时经营同一种产品时进行的内部定价策略选择：跨国企业通过比较母子公司所在国家之间的关税和所得税率差别，进行跨国之间的 集团内部交易，采用可能实现的最高或最低转移价格，以控制税前收益在不同国家的确认，达到税后利润最大化的目的。而转移价格的上限和下限是“外生变量”，即，由企业外部因素所决定，最高转移价格为所在国公开市场的价格，最低转移价格为边际生产成本。与郝斯特不同的是，考比松建立了垂直型跨国公司的转移价格模型。随后，萨缪尔森(Samuelson, 1982)和伊丁（Eden,1985） 论证了转移价格上下限的“内生性”，即，跨国公司可以通过调整转移定价策略影响销售，从而导致生产成本和公开市场价格的变化，这种变化的调节服从跨国公司效益最大化的需要。后来，普鲁萨(Prusa,1990)探讨了在信息不对称情况下最优转移价格的决策；崴德（Vidal,2001）则将转移价格作为决策变量引入全球供应链模型，阐述了转移价格在国际物流管理中的作用。
Though the above mentioned research is innovative in its own way, but it is all common in one way. All the research has a common hypothesis that assumes foreign subsidiaries are all independent ventures. Despite the fact that this type of hypothesis is an explicit assumption, it neglects to consider that MNC management often adopts joint venture and other types of capital ownership structures. In this area, Kant (1989, 1995) made a significant breakthrough with his research. He included the proportionate ownership of MNCs and their overseas subsidiaries in his transfer pricing model analysis further expounding on the multiple conditions involved in determining the best transfer pricing. In his model, the proportional shares are considered important transfer pricing factors. When the corporation and the subsidiaries each own a portion, the overseas subsidiaries’ profit transferred to the parent company and the MNC transfer prices become powerful leverage for the MNC’s overseas subsidiary profit. Despite the truth that these theoretical models do take one step closer to reality, there are still two more steps to go: one of which is consideration of overseas subsidiary capital dividend payout rate. Capital dividend distribution influences the effective income tax rate consequently determining the amount of tax that must be paid by an MNC. Using this theoretical model to look at this situation from an abstract point of view, the real application of the ideas becomes very unclear. In order to remedy the two limitations of the theory, published research studies the effects of subsidiary capital dividend distribution percentage on transfer price theoretical models. Simulation data objectively supports the application principles of this transfer price theoretical model.
虽然上述的这些研究各有创新之处，却有一个共同点，它们都假设外国子公司为跨国公司独资拥有。尽管这种假设有一定的依据，但它忽略了跨国公司常常采用合资和其它控股形式进行跨国经营的情形。在这方面有突破的是康特（Kant，1989，1995），他将跨国公司对海外子公司的所有权比例纳入转移定价的分析模型，进一步阐述了最优转移价格的多种参数条件。在他的模型里，股权比例是决定转移价格的一个重要因素，企业在只拥有部分子公司所有权的情况下会倾向于将海外子公司的利润向母公司转移，而转移价格成为跨国公司获取国外子公司利润的一个强有力的杠杆。尽管康特的理论模型向现实迈近了一大步，它还存在两个不足之处：一是没有考虑国外子公司的红利支付率, 红利分配率影响实际有效所得税率，从而决定跨国公司所必须实际支付的税额。跨国公司在不同国家之间转移利润的主要目的是为了避免支付较高的实际有效所得税率。当国外子公司的利润在跨国公司的总利润中占较高比例时，红利分配率更是具有举足轻重的作用；二是纯逻辑分析而没有运用数据来验算，使理论模型显得过于抽象，并使其现实意义变得十分模糊。为了弥补以上两点缺陷，本文试图将子公司的红利分配比率引入转移价格的理论模型，综合分析所得税率、关税率、子公司股权比例、以及红利支付率对于选择最佳转移价格的影响，并通过数据模拟，客观 地揭示转移价格理论模型的应用原理。
三、扩展的跨国公司转移价格模型
3. Expansion of the MNC transfer pricing model
Assume there is a horizontally structured MNC with operations in two different countries managing the same product. This particular product has definite market strength. The parent company in country 1 has its own production while the subsidiary in country 2 manufactures the final product. A portion of parent company production is sold in the domestic market, while the rest is exported to subsidiaries according to transfer prices and sold in country 2. In order to simplify the analysis, assume that country 1 and country 2 currencies are equal in weight given that the MNC’s customers and consumers are unable to engage in arbitrage either within or between countries 1 and 2.
一家水平型跨国公司同时在两个不同国家内经营同种产品，其产品具有一定程度的市场影响力。母公司在国家1生产、子公司在国家2生产该产品。母公司的部分产品在国内销售，其余部分以转移价格出口给其海外子公司，在国家2进行销售。为便于分析，假设国家1和国家2的货币单位等值，该跨国公司的客户或消费者对其销售的商品不能够在国与国之间进行套利。
It is given that the multinational company’s management profit in country 1 and country 2 are defined as follows:
该跨国公司在国家1和国家2的经营利润分别如下：
π1 = R1(Y1) - C1(Y1 + m) + pm ……………………………(1)
π2 = R2(Y2 + m)–C2(Y2)–(1 + τ)pm ……………………………(2)
In the above equation, π1，π2 represent the management profit of the MNC in parent country 1 and the host country 2: m represents the export product quantity from the parent company to the subsidiary: R1、R2 separately represent the MNC business transaction profit in the parent country and in the host country, respectively. They are separated into the parent company production quantity （Y1 + m） and the host country production quantity Y2 function variables: p represents the parent company product sales to other overseas subsidiaries : τ represents the import customs tax paid by the MNC in the host country.
上式中，π1，π2分别表示跨国公司在母国1和东道国2的经营利润；m表示母公司向子公司出口的产品数量；R1、R2分别表示跨国公司在母国和东道国的营业性收益，它们分别为母国销售量（Y1），东道国销售量（Y2 + m）的函数；C1、C2分别表示跨国公司在母国和东道国的生产成本，它们分别是母国生产量（Y1 + m）、东道国生产量Y2 的函数；p代表母公司销售产品给其海外子公司所制定的转移价格；τ表示东道国对于跨国公司产品的进口关税税率。
Also important, according to the economic limits of marginal diminishing returns and marginal cost principles, we can establish: Ri’> 0, Ri”< 0, Ci'> 0, Ci”> 0 and i = either 1 or 2.
同时，根据经济学边际收益递减及边际成本递增原理，可以设定：Ri’> 0, Ri”< 0, Ci'> 0, Ci”> 0。在此，i = 1 或2。
In the case where there are overseas tax credits, repatriation of the MNC profit can have a repeat government tax. The global retained profit is:
π =（1- t1）π1 +（1- t1）（1–t2）r kπ2 +（1- t2）（1–r）kπ2 …………(3)
在没有国外课税扣除（tax credits）的情况下，跨国公司的遣返利润将会被重复征税，它的全球净利润为：
π =（1- t1）π1 +（1- t1）（1–t2）r kπ2 +（1- t2）（1–r）kπ2 …………(3)
In the upper equation, t1、t2 both represent the income tax of MNC parent company 1 and host country 2, respectively; r represents the subsidiary dividend payout rate, 0 ≤ r ≤1; k represents the ownership percentage of the MNC. If the ownership rights are divided, the dominant party will have a greater number. In an enterprise where there is at least 10% stock ownership, then this party is considered to have significant control over the corporation’s management policies. Therefore, 1/10 ≤ k ≤ 1.
上式中，t1、t2分别表示跨国公司在母国1和东道国2的公司所得税率； r 表示国外子公司的红利支付率，0 ≤ r ≤1; k 代表跨国公司在国外子公司的控股比例。如果股权分散，股东人数众多，在一个企业拥有10%的股份就可能掌握该企业的管理决策权。因此，1/10 ≤ k ≤ 1。
Generally speaking, a country’s government in relation to its country’s citizens tries to avoid double-taxing overseas corporate income. So in reality when calculating repatriated profit, it is necessary to consider tax credit. Besides we also assume that the parent country and the host country are both nonentities in the situation where the MNC’s overseas income is double-taxed. In addition, concerning the discussion of time, it is assumed that πi≥0.
一般而言，一国政府对本国公民、法人的海外收入避免重复征税，所以，在实际遣返利润的计算中必须考虑课税扣除，并且可以假设母国和东道国都不存在对跨国公司的海外收入进行重复征税的情况。另外，由于无论母公司还是海外子公司只有在帐面显示赢利的时候才缴纳税款，因此，我们在讨论时可设πi≥0。
According to international convention, host countries consider restrictions on tax avoidance and tax evasion. MNCs in a host country that acquire investments with their overseas income are generally required to pay 10 to 20% withholding tax. Therefore it is common that the overseas MNC subsidiaries in country 2 not only want to control host country management profit income tax but returning parent country shareholders also want to receive their dividends in advance of the tax. Foreign subsidiaries have effective tax rates to include income tax rate, tax credit and calculated advance tax rates. In more detail, if the advance tax rate is tw, to be paid to the host country for repatriation of profit, we can make a practical assumption that the subsidiary’s tax burden or effective tax rate is:
T2 ＝t2＋tw（1－t2）；
按照国际惯例，东道国基于限制偷税漏税的考虑，对外国跨国公司在本国 境内取得的消极投资收入普遍征收预提税（withholding tax），税率一般在10％～20％之间。由此可知，跨国公司在国家2的海外子公司不仅要按取得的经营利润缴纳东道国的公司所得税，其返回母公司的股东红利还要向东道国缴纳预提税，即，国外子公司的实际有效税率包含了公司所得税率、课税扣除和预提税率等因素。具体来说，如果预提税率为tw，对于从东道国遣返利润的每一元，子公司的实际承担的税负或实际有效税率是：
T2 ＝t2＋tw（1－t2）；
If t1 > T2，the actual tax burden of the subsidiary’s repatriated profit is t1. Then, equation (3) can be written as:
π=（1-t1）π1 +[1- Max(t1, T2 )]rkπ2+（1- t2）（1-r）kπ2 ……………(4)
如果t1 > T2，子公司遣返利润的实际税负则为t1。那么，等式（3）可写作：
π=（1-t1）π1 +[1- Max(t1, T2 )]rkπ2+（1- t2）（1-r）kπ2 ……………(4)
Due to the relationship to the tax rate uncertainty t1> T2 and t1 ≤ T2 both cases are explained as follows.
由于相关税率的差异不确定,所以，存在t1> T2,和t1 ≤ T2 两种情形如下:
1. t1> T2: In this case the parent company income tax rate exceeds the host country’s effective tax rate. In the parent country, the MNC encounters a reduction in tax credit. This is also to say that overseas subsidiaries pay host country income tax. The parent country tax is returned after dividend tax credit is received resulting in T2rkπ2. But in the case that the tax credit is less than the repatriated dividends, parent country income tax （t1 rkπ2）must be paid. Even though there was a reduction in tax credit after repatriating, a host country income tax must still be paid on the dividend balance. Therefore, equation (4) becomes:
π =（1-t1）π1 +(1 - t1)rkπ2 +（1- t2）（1-r）kπ2 ……………(5)
（一）．t1> T2：此时母国公司所得税率高于东道国实际有效税率，跨国公司在母国出现抵减课税扣除不足。也就是说，国外子公司在缴纳东道国的所得税及预提税之后，其返回母国的税后红利可以获得的课税扣除额为T2rkπ2，但由于课税扣除额小于遣返红利所必须缴纳的母国公司所得税额（t1 rkπ2），抵减 课税扣除之后的遣返红利的余额还必须缴纳母国的公司所得税。因此，等式（4）此时变为：
π =（1-t1）π1 +(1 - t1)rkπ2 +（1- t2）（1-r）kπ2 ……………(5)
From the above equation we get:
π =[π1 + rk π2 +（1-r）kπ2]-[ t1π1+ t1rkπ2+ t2(1-r)kπ2] ……………(6)
由上式得到:
π =[π1 + rk π2 +（1-r）kπ2]-[ t1π1+ t1rkπ2+ t2(1-r)kπ2] ……………(6)
In order to express the economic significance, equation (6) becomes:
π =[π1 + rkπ2 +（1-r）kπ2]-[ t1π1 + t1rkπ2 ]
+ T2rkπ2 - [T2rkπ2 + t2(1-r)kπ2] ……………(7)
为了表述其经济含义，等式（6）可写成：
π =[π1 + rkπ2 +（1-r）kπ2]-[ t1π1 + t1rkπ2 ]
+ T2rkπ2 - [T2rkπ2 + t2(1-r)kπ2] ……………(7)
The given equation means:
Tax after gross profit = [tax before gross profit] – [parent country to parent subsidiary profit and tax on repatriated subsidiary dividend tax] + [repatriated dividend tax credit] – [all government tax paid by subsidiary to host country]
该式表示：
税后总利润 = [税前总利润]–[母国对母公司利润和子公司遣返红利的征税]
+ 遣返红利的课税扣除 – [东道国对子公司的全部征税]
Simplifying equation (7), MNC after-tax gross profit becomes:
π =(1- t1)π1 + [1-t1r - t2(1-r)]kπ2 ……………(8)
整理等式（7）,可以得出跨国公司的税后总利润为:
π =(1- t1)π1 + [1-t1r - t2(1-r)]kπ2 ……………(8)
2. t1 ≤ T2: In this case, the parent country tax rate is less than or equal to the host country effective tax rate. The overseas subsidiary retains the host country’s income tax in advance of the tax, and afterwards the parent country’s overseas after-tax dividends do not have a parent country tax burden and actually receive a tax credit represented as t1rkπ2. Therefore, equation (4) now represents the MNC after-tax gross profit:
π=（1-t1）π1 +(1–T2)r kπ2 ＋（1－t2）（1-r）kπ2 ……………(9)
（二）. t1 ≤ T2：此时母国税率低于或等于东道国实际有效税率，国外子公司在缴纳东道国的所得税及预提税之后，返还母国的海外税后红利无须再承担母国税负，在母国可以获得的课税扣除额为t1 rkπ2。因此，由等式（4）所 表述的跨国公司的税后总利润此时变为：
π=（1-t1）π1 +(1–T2)r kπ2 ＋（1－t2）（1-r）kπ2 ……………(9)
The above equation can be written as:
π =[π1 + rkπ2 +（1-r）kπ2]-[ t1π1+ T2rkπ2+ t2(1-r)kπ2] ……………(10)
上式可写为:
π =[π1 + rkπ2 +（1-r）kπ2]-[ t1π1+ T2rkπ2+ t2(1-r)kπ2] ……………(10)
Simplifying equation (10):
π =(1- t1)π1 + [（1-t2） - tw(1- t2)r ]kπ2 ……………(11)
整理等式（10）,可以得出:
π =(1- t1)π1 + [（1-t2） - tw(1- t2)r ]kπ2 ……………(11)
4. Best transfer pricing strategy options
四、转移价格策略的最优选择
The best transfer prices achieve the most MNC after-tax profit. To apply the most optimal solution to this economic problem, we use a mathematical method to analyze the income tax rate, customs tax rate, ownership percentages, as well as subsidiary dividend pay-out rate and its influence on transfer pricing options.
最佳转移价格是使跨国公司的税后总利润最大化。运用解决最优化问题的经济数学方法，可以分析所得税率、关税率、控股比例、以及子公司红利支付率对于转移价格选择的影响。
1. t1 > T2
（一）．t1 > T2
MNC after-tax gross profit is represented by equation (8), in which p contributes to limiting gross profit:
πp= (1-t1)m - km(1+τ)[1-t1r-t2(1-r)] ……………(12)
跨国公司的税后总利润为等式（8），对转移价格p求导，得出A公司转移价格的边际净利润贡献如下：
πp= (1-t1)m - km(1+τ)[1-t1r-t2(1-r)] ……………(12)
The above equation shows how different variations in MNC after-tax profit π effect transfer price p, creating an important decision-making tool for transfer price reference values.
上式表示跨国公司的税后总利润π如何随着转移价格p的不同而变化，所以，它对于转移价格的决策具有重要的参考价值。
Finding #1: In a sole-proprietorship subsidiary, the subsidiary profit becomes the entire sum of the dividend distribution and k=1, r=1. Consequently, equation (12) becomes πp= -(1-t1)mτ〈 0. As reflected, with an increase in transfer price, the MNC after-tax profit will decrease. In this type of case, no matter if there is a difference in tax rates, the best option policy is to use the lowest transfer price (LTP). As a result of the broad international acceptance of LTP, it puts a limit on production costs, therefore LTP ≥ C1’.
推论一：如果子公司为独资企业、子公司的利润作为红利全额分配，即，k=1, r=1,那么，等式（12）变为：πp= -(1-t1)mτ〈 0。显然，随着转移价格的增加，跨国公司的税后利润会减少。在这种情况下，无论税率的差异如何，最佳策略是选择最低转移价格（LTP）。由于国际上广泛接受的最低转移价格为边际生产成本，因此，LTP ≥ C1’。
Finding #2: If the subsidiary has ownership in the corporation, the subsidiary profit becomes the full sum of the dividend distribution, 1/2 ≤ k <1, r=1, therefore equation (12) becomes: πp = (1-t1)m[1- k(1+τ)]。When k(1+τ)〈 then πp 〉0. In this case, if the parent company gross tax is greater than the host country’s effective tax rate, the MNC best transfer price is to use the highest transfer price beyond the company’s equivalent market price. In this case, if adopting the lowest transfer price the MNC is at a disadvantage because the lowest transfer price takes into account the most acquired subsidiary profit and this profit is due to the (1-k) residual portion of the overseas shareholder share. Here, two country’s companies’ gross tax rate difference has an influence on transfer price policy options.
推论二：如果子公司为控股企业、子公司的赢利作为红利全额分配，即，1/2 ≤ k <1, r=1,那么，等式（12）变为：πp = (1-t1)m[1- k(1+τ)]。当k(1+τ)〈 1时，πp 〉0。在这种情况下，如果母国公司所得税率高于东道国实际有效税率、那么，跨国公司的最佳转移价格是使用最高转移价格，即，公司外部市场的公平价格。这时，采用低转移价格对跨国公司不利，因为，低转移价格会使子公司获得较多的利润，而这些利润将由拥有(1-k)剩余股权的国外股东分享。在这里，两国公司所得税率的差异对于转移价格策略的选择没有影响。
Finding #3: If the subsidiary has relative ownership in the company, the dividend distribution rate will change making 1/10≤k≤1/2, 0≤r≤1，therefore equation (12) becomes:
πp= (1-t1)m｛1- k(1+τ)[1-t1r-t2(1-r)]/ (1-t1)｝
推论三：如果子公司为相对控股公司、红利分配率可变，即，1/10≤k≤1/2, 0≤r≤1，那么，等式（12）可写成：
πp= (1-t1)m｛1- k(1+τ)[1-t1r-t2(1-r)]/ (1-t1)｝
In this case, transfer pricing policy is:
这时的转移价格策略为：
When k (1+τ)ψ〈 1时，πp 〉0, chose the highest transfer price;
当 k (1+τ)ψ〈 1时，πp 〉0，选择高转移价格；
When k (1+τ)ψ > 1时，πp < 0, chose the lowest transfer price;
当 k (1+τ)ψ > 1时，πp < 0，选择低转移价格；
When k (1+τ)ψ =1时，πp = 0, choose any transfer price.
当k (1+τ)ψ =1时，πp = 0，可任选转移价格。
From the above equation, ψ= [1-t1r-t2(1-r)]/ (1-t1), it shows the effect of transfer price on dividend distribution rate. When the total sum distribution of the subsidiary’s profit is given to the host country, r =1，ψ= 1，equation（12） yields，πp 〉0, the MNC’s best policy choice is a high transfer price. If not all the subsidiary profit is paid to the host country then transfer pricing policy depends on the value of k (1+τ)ψ.
上式中，ψ= [1-t1r-t2(1-r)]/ (1-t1)，它表示红利分配率对于转移价格的影响。如果子公司的利润全额分配给股东时，r =1，ψ= 1，等式（12）显示，πp 〉0，跨国公司的最佳策略是选择高转移价格。如果子公司的利润不全额分配，那么，转移价格策略取决于k (1+τ)ψ的数值。
2. t1 ≤ T2
（二）. t1 ≤ T2
MNC after-tax gross profit is represented by equation (8), where p affects transfer price which in turn contributes to limiting company A retained profit:
跨国公司的税后总利润为等式（8），对转移价格p求导，得出A公司转移价格的边际净利润贡献如下：
πp= (1-t1)m{1– (1+τ)k[(1－t2) –r tw (1- t2)]/ (1- t1) } …………(13)
The above equation shows when the parent country tax rate is not greater than the host country effective tax rate, transfer price and other variables have an influential effect on after-tax production profit. They also have a guiding significance on transfer pricing options. Applying the above equation delves into several real situations:
上式表示当母国税率不高于东道国实际有效税率时，转移价格与其它变量相互作用对跨国公司税后总利润产生的影响，因此，它对于转移价格的选择也有着具体的指导意义。以下运用上式探讨几种较为现实的情况：
Finding #4: If the subsidiary is a sole-proprietorship, the subsidiary total sum profit is its dividend distribution and does not have advance tax, k=1, r =1, tw=0, equation（13）simplified becomes:
πp= (1-t1)m [1– (1+τ) (1－t2) / (1- t1) ]
推论四： 如果子公司为独资企业、子公司的赢利全额作为红利分配，并且 没有预提税，即，k=1, r =1, tw=0, 等式（13）简化为：
πp= (1-t1)m [1– (1+τ) (1－t2) / (1- t1) ]
Thereby we can know, when (1+τ) (1－t2) / (1- t1) > 1 or τ> (t2－t1) / (1- t1), πp < 0.
由此可知，当 (1+τ) (1－t2) / (1- t1) > 1时，或τ> (t2－t1) / (1- t1) 时，πp < 0。
This is a well-known Horst principle: in a sole-proprietorship, there is no advance tax. In the situation where there is reserved subsidiary profit, we assume that the customs tax is greater than the income tax difference and a low transfer price is the optimal strategy.
这是大家熟悉的郝斯特原理：在独资、没有预提税、子公司不保留利润的情况下，假定关税率大于相对所得税率的差异，低转移价格为最优策略。
Finding #5: If the subsidiary has corporate ownership, the total sum of the subsidiary profit becomes the dividend distribution, 1/2
推论五：如果子公司为控股企业、子公司的赢利全额作为红利分配，即，1/2
Clearly, when k (1+τ) (1－T2) / (1- t1) < 1，πp > 0. That is also to say, when an overseas subsidiary has majority ownership in the company (1/2
推论六：如果子公司为相对控股公司、红利分配率可变，1/10≤k≤1/2, 0≤r≤1，那么，根据式（13）：
When Φ< 1, adopt a high transfer price; conversely, the standard in reality is to adopt a low transfer price.
当Φ< 1时，采用高转移价格；相反，则采用低转移价格。
In the above equation, Φ=(1+τ)k[(1－t2) –r tw (1- t2)]/ (1- t1). Here, dividend distribution rate effect on transfer price is because of the advance tax. Also, due to r tw (1- t2) reducing the value of Φ, the effect on dividend distribution rate tends to cause companies to choose high transfer prices. This type of effect is not well understood because any parent company that has repatriated profit not only must pay a host country income tax but also deducts the tax in advance, adding to the parent company’s tax credit limits. In the host country, MNCs should adopt a high transfer price to reduce host country taxation in the host country.
上式中，Φ=(1+τ)k[(1－t2) –r tw (1- t2)]/ (1- t1)。在这里，红利分配率之所以影响转移价格是因为存在预提税。并且，由于—r tw (1- t2)会降低Φ的值，所以红利分配率的作用偏向于选择高转移价格。这种作用不难理解，因为任何遣返回母公司的利润不仅要支付东道国的公司所得税，而且要扣除预提税，再加上母国对于课税扣除额的限制，在东道国交付的一应税款不能在母国获得全额抵减，跨国公司有必要采用高转移价格来减少在东道国支付的税款。
五、转移价格模型的模拟应用
5. Simulation and application of transfer pricing models
Assume A and B are an MNC parent company and subsidiary, respectively. For every 8 dollars in cost, A produces 10,000 electrical components. The sales are in a different country B where every 20 dollars of sales price has exclusive selling strength in the market. Country A income tax is t1＝40％, while country B is t2＝20％, the advance tax rate tw＝15％, B must pay 10% customs tax. It is given the customs tax is figured according to price (particularly transfer price) and given the MNC adopts a different transfer price and can obtain significantly different profit. Different transfer prices have a limited effect on after-tax profit, particularly focusing on the real value of πp. If πp>0, after-tax profit will result in increased transfer price; conversely, clearly if πp<0, after-tax profit will result in a reduced transfer price.
假设A和B分别为同一跨国企业的母公司和子公司，A以每个8美元的成本生产10万个电子元件，销售给位于另一国家的B，然后，B以每个20美元的价格销售给包销商。A国所得税率t1＝40％，B国所得税率t2＝20％，预提税率tw＝15％，B必须支付10%的从价关税，该关税按照发票价（即，转移价格）征收，在其它情况不变时，该跨国企业采用不同转移价格所获得的利润会有显著的差异。不同转移价格对企业税后利润的边际影响，集中反映在πp值的正负上。 如果πp>0, 税后利润随转移价格的提高而增加; 反之, πp<0则表明税后利润随转移价格的提高而减少。
Sections 5-1 and 5-2 present cases where t1 > T2 and t1 ≤ T2, separated according to model (12) and model (13) and the effect on income within a horizontal MNC parent company and the limited contribution to after-tax profit. It explores how this situation is affected by different ownership and dividend distribution percentages and other changes.
表5-1，5－2分别给出t1 > T2 ，t1 ≤ T2情况下，分别依据模型（12）、（13）所得的上述水平型跨国企业母子公司之间转移价格对企业总体税后利润的边际贡献随控股比例和红利分配率的不同而变动的情况。
Section 5-1 Transfer price limited changes in a horizontal MNC
表5－1 水平型跨国企业在t1 > T2时转移价格的边际贡献变化
Transferred goods m – 100,000 pieces
转移货物数量m = 100,000件
Dividend distribution 0≤r≤1, Company A in relationship to Company B ownership is 0≤k≤1
红利分配率0≤r≤1 A公司对B公司控股比例0≤k≤1
Country A income tax t1＝40％, Country B income tax t2＝20％, advance tax rate tw＝15％
A国所得税率t1＝40％; B国所得税率t2＝20％; 预提税率tw＝15％
Country B effective tax rate T2＝[20％＋15％（1－20％）]= 32％
B国实际有效税率T2＝[20％＋15％（1－20％）]= 32％
Country B import tax rateτ＝10％
B国进口税率τ＝10％
Units: 1000
（单位：1000）
Owner控股比例k
Div Dist. Dist.
红利分配率r
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
0% 51.20 42.40 33.60 24.80 16.00 7.20 -1.60 -10.40 -19.20 -28.00
10% 51.42 42.84 34.26 25.68 17.10 8.52 -0.06 -8.64 -17.22 -25.80
20% 51.64 43.28 34.92 26.56 18.20 9.84 1.48 -6.88 -15.24 -23.60
30% 51.86 43.72 35.58 27.44 19.30 11.16 3.02 -5.12 -13.26 -21.40
40% 52.08 44.16 36.24 28.32 20.40 12.48 4.56 -3.36 -11.28 -19.20
50% 52.30 44.60 36.90 29.20 21.50 13.80 6.10 -1.60 -9.30 -17.00
60% 52.52 45.04 37.56 30.08 22.60 15.12 7.64 0.16 -7.32 -14.80
70% 52.74 45.48 38.22 30.96 23.70 16.44 9.18 1.92 -5.34 -12.60
80% 52.96 45.92 38.88 31.84 24.80 17.76 10.72 3.68 -3.36 -10.40
90% 53.18 46.36 39.54 32.72 25.90 19.08 12.26 5.44 -1.38 -8.20
100% 53.40 46.80 40.20 33.60 27.00 20.40 13.80 7.20 0.60 -6.00
(1) Chart 5-1（t1 > T2）, given changes in overall MNC after-tax profit, we make the following conclusions:
（一）对应表5－1（t1 > T2）中跨国公司总体税后利润的变动，我们有以下推断：
1. When k is less than 70%, no matter how the dividend distribution rate r changes, πp > 0 and after-tax profit cause the transfer price to increase. The best policy is clearly to adopt a high transfer price.
1．当k小于约70％时，无论红利分配率r的取值如何变动，πp > 0，即，税后利润随转移价格的提高而增加，最佳策略显然是采用最高转移价格。
2. When k = 70%, r is less than about 10%, πp < 0, after-tax profit causes transfer prices to further decrease. Therefore, it is best to set the lowest transfer price; when r is greater than 10%, πp > 0, and it is best to choose a high transfer price.
2．当k=70％，r小于约10％时，πp < 0，税后利润随转移价格的提高而减少，所以，应当制定最低转移价格；当r 大于10％时，πp > 0，选择最高转移价格；
3. When k = 80% and r is less than 60%, choose a low transfer price; when r is greater than 60%, πp > 0, adopt a high transfer price;
3．当k=80％，r小于 60％时，选择最低转移价格；r 大于60％时，πp > 0，采用最高转移价格；
4. When k = 90% and r is less than 90%, implement the lowest transfer price; When r=1, πp > 0, the best transfer price is to implement the highest transfer price equal to the overseas market price;
4．当k=90％，r小于约90％时，使用最低转移价格；r =1时，πp > 0，最佳转移价格是实施最高转移价格，即，公司外部市场的公平价格；
When k=1, no matter the changes in the value of the dividend distribution r, πp < 0, the best policy is to choose the lowest transfer price, LTP = C1’. The lowest transfer price becomes limited by the production cost;
5．当k=1时，无论红利分配率r的取值如何变动，πp < 0，最佳策略是选择最低转移价格，LTP = C1’，即，最低转移价格为边际生产成本；
Above we showed the transfer pricing situation where Country A income tax rate is greater than the effective tax rate in country B （t1 > T2）. Continue below to see the opposite transfer pricing situation.
以上是在A国所得税率高于B国实际有效税率（t1 > T2）情况下的转移价格选择。接下来看看与此相反情况下的转移定价：
Table 5-1 Transfer price limited changes in a horizontal MNC
表5－2 水平型跨国企业在t1 ≤T2时转移价格的边际贡献变化
Transferred goods m – 100,000 pieces
转移货物数量m = 100,000件
Dividend distribution 0≤r≤1, Company A in relationship to Company B ownership is 0≤k≤1
红利分配率0 ≤ r ≤ 1; A公司对B公司控股比例0 ≤ k ≤1
Country A income tax t1＝20％, Country B income tax t2＝25％, advance tax rate tw＝20％
A国所得税率t1＝20％; B国所得税率t2＝25％; 预提税率tw＝20％
Country B effective tax rate T2＝[20％＋15％（1－20％）]= 32％
B国实际有效税率T2＝[25％＋20％（1－25％）] = 40％
Country B import tax rateτ＝10％
B国进口税率τ＝10％
Units: 1000
（单位：1000）
控股比例k
Div Dist. Own.
红利分配率r
10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
0% 71.75 63.50 55.25 47.00 38.75 30.50 22.25 14.00 5.75 -2.50
10% 71.92 63.83 55.75 47.66 39.58 31.49 23.41 15.32 7.24 -0.85
20% 72.08 64.16 56.24 48.32 40.40 32.48 24.56 16.64 8.72 0.80
30% 72.25 64.49 56.74 48.98 41.23 33.47 25.72 17.96 10.21 2.45
40% 72.41 64.82 57.23 49.64 42.05 34.46 26.87 19.28 11.69 4.10
50% 72.58 65.15 57.73 50.30 42.88 35.45 28.03 20.60 13.18 5.75
60% 72.74 65.48 58.22 50.96 43.70 36.44 29.18 21.92 14.66 7.40
70% 72.91 65.81 58.72 51.62 44.53 37.43 30.34 23.24 16.15 9.05
80% 73.07 66.14 59.21 52.28 45.35 38.42 31.49 24.56 17.63 10.70
90% 73.24 66.47 59.71 52.94 46.18 39.41 32.65 25.88 19.12 12.35
100% 73.40 66.80 60.20 53.60 47.00 40.40 33.80 27.20 20.60 14.00
(2) According to chart 5-2 （t1 ≤ T2）, considering changes to collective MNC profit, we know: Besides the two situations where k=1、r = 0 and k=1、r = 10, the limit on the contribution of transfer prices is a positive number, πp 〉0. The best strategy is to choose the highest transfer price. In practice, more precise calculation shows:
（二）对应表5－2（t1 ≤ T2）中跨国企业总体税后利润的变动，可以得知：除了k=1、r = 0和k=1、r = 10两种情形外，转移价格的边际贡献都为正数，即，πp 〉0，最佳的策略是选择最高转移价格。实际上，更精确的计算显示：
1. When k=1 and r < 20％, πp < 0 the best strategy is to adopt the lowest transfer price.
1． 当k=1、r < 20％时，πp < 0，最佳策略是采用最低转移价格；
2. When k=1 and r > 20％，πp > 0. Choose the highest transfer price.
2． 当k=1、r > 20％时，πp > 0，选择最高转移价格；
3. When k is slightly less than 100% (more accurately, k<97%), no matter the changes in the value of the dividend distribution r, πp is always > 0. The best strategy is to adopt the highest transfer price.
3． 当k 略低于100%时（精确地说，k < 97％），无论红利分配率r的取值如何变动，πp > 0，最佳策略是采用最高转移价格。
简而言之，如果t1 ≤ T2，只有在B公司是独资拥有，并且，B公司的红利分配相当少（r小于15%）时，低转移价格才成为最佳策略。
5. Epilogue
五、结语
The “opening up” process in Chinese corporations and how to implement transfer pricing presents a challenging international management problem. Research in corporate tax burden is the driving force laying the groundwork that probes into different ownership distribution structures to find the optimal transfer pricing strategy options thereby expanding transfer pricing theoretical framework. We integrate influences of different types of transfer pricing principles to establish and implement different conditions for optimal transfer pricing. In this way, we study effective transfer pricing information to improve the reference material available for corporate strategic models. Of course, the complexity of international business activities demands corporate tax burden tradeoffs that reside outside of strategic principles. The system described in this research considers how to use the interior corporate environment to formulate good transfer prices. I encourage China’s corporations, throughout the international competitive environment, to successfully implement MNC management activities and acquire larger market share and independence.
我国企业在“走出去”的过程中如何实施转移价格是一个具有挑战性的实际国际经营问题。本文从企业税负驱动机制的微观层面上，探讨了在不同控股比例和红利分配率的情况下最优转移价格的策略选择，通过扩展现有转移价格的理论框架，综合比较多种基本因素对转移价格的影响，探讨制定和实施最优转移价格的不同变量条件，试图为有效利用转移价格提供具有借鉴意义的企业决策模型。当然，国际商务活动的复杂性需要企业权衡税负以外的战略因素，系统考虑内外部环境制订好转移价格，有利于我国企业更成功地进行跨国经营活动，在国际竞争中获取更大的市场空间和自由度。
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