Although the transfer pricing of foreign-funded enterprises in China is not entirely to reduce China's tax obligations, not to reduce its global tax obligations, but to seek certain management strategies and benefits, the problems brought by transfer pricing to China's economy cannot be ignored. On the one hand, many foreign-invested enterprises are losing money year after year, on the other hand, they are constantly increasing their investment and expanding their business scale, so they are always losing money. This situation obviously does not conform to the routine of market economy and enterprise management, and has caused serious harm to the normal order of China's economic development:

First, transfer pricing deviates from China's preferential tax policies and has a negative impact on the introduction of foreign capital. In order to maximize their own interests, foreign businessmen transfer profits abroad, which leads to capital outflow, affects the efficiency of reinvestment and leads to an increase in short-term investment behavior; The book losses of foreign-funded enterprises have made other potential foreign investors have a bad impression on the investment environment and weakened their determination to invest in the China market, which runs counter to China's intention of adopting preferential tax policies to attract investment.

Second, transfer pricing infringes on China's tax jurisdiction, resulting in a decrease in government revenue and a huge loss to the Chinese side of foreign-invested enterprises. The annual tax avoidance of multinational corporations has caused losses of more than 30 billion yuan to China, and the Chinese side of the joint venture has been overwhelmed by the losses of the enterprise, and its interests have been seriously infringed. Finally, transfer pricing disturbs China's normal economic order and destroys the economic environment of fair competition. After all, not all foreign-funded enterprises engage in transfer pricing, which is obviously not conducive to the fair competition of those honest tax-paying enterprises under the market economy.

During the "Ninth Five-Year Plan" period, China accelerated the infrastructure construction of anti-tax avoidance work, and promulgated 1998 "Regulations on Tax Administration of Business Transactions between Associated Enterprises" in May, but the effect is far from the relatively perfect transfer pricing countermeasure tax system in western countries (such as the United States and Japan). Therefore, in order to embody the spirit of free, fair and just competition in WTO, while ensuring enterprises to obtain the basic rights they deserve, we should first improve the tax law of foreign-invested enterprises in China, formulate a countermeasure tax system for the special problem of reverse tax avoidance, strictly distinguish between legal tax avoidance and tax evasion, define the transfer of profits abroad by transfer pricing as tax evasion, and impose severe sanctions on this behavior; Secondly, when setting up foreign-invested enterprises, we should pay attention to protecting the interests of Chinese investors in all aspects. Sino-foreign joint ventures or cooperation contracts should proceed from protecting the interests of both investors, and should not give up China's due interests because of attracting foreign investment; In the management of foreign-funded enterprises, China should introduce high-quality management talents and fully understand market information in order to grasp the initiative of management and benefit distribution; Finally, improve the investment environment in China, attract foreign investment by fiscal incentive policies, and constantly improve the degree of legalization in China. Vigorously develop infrastructure construction and gradually replace the sacrifice of tax interests with a good investment environment; Strengthen the management and inspection of foreign-funded enterprises and use advanced tax collection and management methods to safeguard China's economic rights and interests.