International transfer pricing for business operations in China : inducements, regulation and practice

Koon Hung CHAN, Lynne CHOW

Research output: Journal PublicationsJournal Article (refereed)peer-review

10 Citations (Scopus)


This paper provides an empirical analysis of international transfer pricing in the People's Republic of China. The examination of the business environment in China reveals a mixed inducement for transfer pricing decisions by foreign investment enterprises (FIEs). The legislation on transfer pricing in China is similar to that of its major trading partners. Competition among local governments for foreign investment, inadequate resources for tax enforcement, and inadequate documentation by taxpayers hinder tax audits on transfer pricing. An analysis of aggregate import and export data does not support the allegation that, in general, FIEs shift profits out of China by over-pricing their imports and under-pricing their exports. However, there was some evidence of outward income-shifting in certain key sectors.
Original languageEnglish
Pages (from-to)1269-1289
Number of pages21
JournalJournal of Business Finance and Accounting
Issue number9-10
Publication statusPublished - 1 Oct 1997
Externally publishedYes


  • international transfer pricing; inducements; over-pricing of imports; under-pricing of exports; China

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