1, not illegal. The tax avoidance principle of transfer pricing is generally applicable to affiliated enterprises with different tax rates. Through transfer pricing, part of the profits of high-tax enterprises are transferred to low-tax enterprises, and the total tax payment of the two enterprises is finally reduced. 2. Article 36 of the Tax Administration Law: In the business dealings between enterprises or institutions or places engaged in production and business operations established in China and their affiliated enterprises, foreign enterprises collect or pay prices and fees according to the business dealings between independent enterprises; The tax authorities have the right to make reasonable adjustments if the amount of taxable income or income is reduced without collecting or paying the price or expenses according to the business dealings between independent enterprises. Therefore, how to judge whether the transfer pricing is reasonable is very important. The tax bureau will determine the principle and calculation method of transfer pricing adjustment through four steps: enterprise investigation, related relationship investigation, related transaction amount investigation and transfer pricing analysis. The rationality of transfer pricing is mainly confirmed by comparable uncontrolled price method, resale price method, cost additive process method, transaction net profit method and profit division method.