Tax planning for enterprise income tax in real estate development enterprises - transfer pricing tax

2. Non-tax motives

In addition to tax considerations, we can see more about non-tax motives for transfer pricing. The tax motive for transfer pricing has been relegated to a secondary position between two countries where rates are uniform or not very different, since the proximity of rates makes transfer pricing almost impracticable in reducing the tax burden, and in countries with similar rates, transfer pricing is mostly based on other motives in terms of management. Even among countries with large differences in tax rates, many important non-tax motivations can be found behind transfer pricing, such as entry into and control of markets; regulating profits and changing the local image of real estate development subsidiaries; transferring funds with more subsidies and tax refunds; avoiding foreign exchange risk; and accelerating cost recovery and profit repatriation。

(iv) constraints on transfer pricing

The broad scope of transfer pricing does not mean that transfer pricing is a golden magic wand, and real estate developers can use it for many purposes at their discretion. In practice, transfer pricing may also be constrained by a number of related factors. Internal factors that constrain transfer pricing include, inter alia, limitations on the self-interest of members ' real estate development companies; restrictions on the motivation of real estate development company staff; limitations on the evaluation of the performance of real estate development companies; and limitations on the complexity of pricing internal transactions. External factors that constrain transfer pricing are, inter alia, the threat of double taxation, threats of inter-sectoral income conflicts, threats of audit by firms of certified accountants, etc. The greatest constraint on transfer pricing is derived from certain international revenue and cost allocation principles and anti-avoidance tax provisions for transfer pricing adopted by a growing number of countries。

The ability of real estate developers to use complex, man-made transfer pricing has been increasingly curtailed by the governments of the countries (regions) in which they operate。