Regarding the principles of advance pricing, China’s current relevant laws and regulations do not provide for it. Academics have mixed views on this. Some people believe that advance pricing should follow three principles: (1) Broad principle. Generally speaking, appropriately broad key assumptions can ensure that changes in the taxpayer's business conditions under normal circumstances will not affect the effect of advance pricing. If the key assumptions are narrowly defined, once the actual situation of the company exceeds the scope of the key assumptions, the advance pricing will require renegotiation by both parties, which will greatly reduce the applicable period of advance pricing and make the advance pricing that consumes a lot of effort from both parties have little effect. . On the other hand, broad key assumptions can also reduce the occurrence of taxpayers easily invalidating key assumptions through manual manipulation. (2) Quantitative principle. The setting of key assumptions should be as quantitative as possible. Among the key assumptions, there are basic qualitative parts and quantitative parts. If the tax authorities can refine the key assumptions based on the specific circumstances of the enterprise and consider them quantitatively, then the determination of key assumptions will be more appropriate. For example, in the assumption of advance pricing, the change in the business scale of the enterprise can be specifically reflected by the ratio to which the sales revenue drops, rather than simply explained by the words "sales revenue drops significantly". In practice, in order to avoid disputes between the parties to the agreement as to whether the key assumptions are met, it is a better choice to adopt quantified key assumptions. (3) Clarify the principles. It includes the following three aspects: First, avoid confusing the setting of key assumptions with transfer pricing methods.

Although the above explanation of the advance pricing principle is not meaningless, it is not comprehensive and accurate. We believe that advance pricing should follow the following principles:

1. Voluntary principle. Advance pricing is a bilateral behavior, that is, an agreement reached by taxpayers and taxation authorities after full negotiation on an equal basis. Therefore, whether to apply for advance pricing is entirely decided by the taxpayer, and the content of the advance pricing agreement is also It should be determined through negotiation between both parties, and neither party may impose its will on the other party.

2. Legal principle. The legal principle of taxation, also known as tax legalism, tax legalism, tax legalism, legality principle, etc., is a very important basic principle in tax law and has been recognized by contemporary countries. Its basic spirit is reflected in the constitutions of various countries. or are reflected in tax laws.

3. Principle of normal transactions. Also known as the "fair independence principle", "fair transaction principle", etc., it refers to the allocation of income and expenses between completely independent and unrelated enterprises or individuals based on the pricing standards or prices adopted under market conditions. principle. The arm's length principle has now been accepted and adopted by most countries in the world and has become the guiding principle for tax authorities to handle the allocation of income and expenses between related enterprises.

4. Efficiency principle. Taxation should not only be fair but also efficient. Generally speaking, tax efficiency includes two aspects: tax administrative efficiency and economic efficiency. Among them, tax administrative efficiency, also known as the efficiency of taxation itself, refers to obtaining as much tax revenue as possible with as little collection fees as possible, or in other words, obtaining larger tax revenue with smaller tax costs. In order to facilitate the conclusion of an advance pricing agreement, the United States has taken a series of measures to simplify the advance pricing process. The director of the U.S. APA department can take any measures that do not violate national laws, regulations and agreements to implement the APA rules, and can adjust the relevant content stipulated in the APA procedures such as time limits, APA requirements, etc., as long as it is consistent with the principle of strengthening effective tax management. . If the progress of the APA project violates the principle of strengthening effective tax administration, the tax department may terminate the review of the taxpayer's APA application. At the same time, the U.S. APA program has formulated special terms for small businesses, such as reducing application fees, compressing information requirements, simplifying procedures, and shortening the APA negotiation time. Protect taxpayers’ trade secrets

Since the promulgation of the advance pricing agreement procedure in 1991, the U.S. IRS has refused to disclose the contents of the APA on the grounds that such an approach would undermine taxpayers’ privacy and confidentiality rights and would also Reduce the enthusiasm of enterprises to participate in APA. In 1996, the Bureau of National Affaires sued the IRS, trying to force the disclosure of the contents of the APA based on Section 6110 of the Tax Act and FOIA. The reason was that the IRS was creating a secret legal zone through the APA and that disclosure of the APA should be used to prevent the IRS from doing so. Bossy and arbitrary behavior. The IRS eventually compromised and admitted that the APA was a written judgment that should be disclosed under Section 6110. However, the two parties disagreed over the extent of disclosure. In 1999, parliamentary legislation (Public Law No. 106-170) classified APA as information that should be protected under the confidentiality clause of Section 6103, and instead used the annual financial report to disclose overall information about APA. Although the implementation of the advance pricing system has many positive effects, it is not perfect. In the case of advance pricing, taxpayers are likely to abuse their advance pricing rights to evade taxes. In order to prevent taxpayers from abusing advance pricing, Chapter 7 "Monitoring and Enforcement" of China's "Implementation Rules" mainly stipulates: (1) Taxpayers' data retention and annual reporting obligations.

Article 19 of the "Implementation Rules" stipulates: "During the execution period of the advance pricing arrangement, taxpayers must completely preserve the documents and information related to the arrangement (including account books and relevant records, etc.), and shall not lose, destroy or transfer them; they must be in the tax year. Within 4 months after the termination, an annual report on the implementation of the APA shall be submitted to the competent tax authority. The annual report shall describe the operation situation during the reporting period and prove that the terms of the APA have been complied with, including all matters required by the APA. , and whether there are any requirements to modify or substantially cancel the advance pricing arrangement. (2) The inspection power of the tax authorities. Article 20 of the "Implementation Rules" stipulates: "During the execution period of the advance pricing arrangement, the competent tax authorities shall periodically (generally) for half a year) to check the taxpayer's performance of the arrangements. The inspection content mainly includes: whether the taxpayer complies with the terms and requirements of the arrangement; whether the information and annual report provided for negotiating the arrangement reflect the actual operating conditions of the taxpayer; whether the information and calculation method based on the transfer pricing method are correct; whether the arrangement Whether the assumptions and premises described in are still valid; whether the taxpayer's use of transfer pricing methods is consistent with the assumptions and premises, etc. If the taxpayer complies with the terms of the advance pricing arrangement and meets the conditions of the arrangement, the competent tax authorities shall recognize the transfer pricing principles and calculation methods of the related-party transactions mentioned in the advance pricing arrangement. If a taxpayer is found to be in general violation of the arrangement, it will be dealt with depending on the circumstances until the arrangement is revoked. (3) Reporting obligations when there are substantial changes in advance pricing. Article 22 of the "Implementation Rules" stipulates: "During the execution period of the advance pricing arrangement, if there are any substantial changes that affect the advance pricing (for example, changes in assumptions), the taxpayer shall report to the competent tax authority within 15 days after the change occurs. A written report detailing the impact of the change on the execution of the APA and attaching relevant information.