Transfer pricing(TP): refers to the internal price of an enterprise group determined by the activities of distributing the products between parent companies and subsidiaries, subsidiaries and subsidiaries, of  providing commercial affairs, transfer of technology, capital borrowing & lending and others inside a multinational corporation 

1. Two types of transfer pricing: one is determined by the basis of "cost plus"; the other is the "negotiated"

2. Mode of transfer pricing:
a. Price of goods: Enterprises transfer their profits and cashflows by adjusting the price of goods higher or lower than the market price under the normal trading principle
b. Labor costs: services can be provided between subsidiaries to achieve transfer pricing by charging high or low service fees
c. Patents and proprietary knowledge: payments of the use of technical Franchise can be made in a simple form or hidden in other prices
d. Loan: In the process of the parent company investing in the subsidiary company, the loan is more flexible than the participating shares. If the interest paid by the subsidiary does not exceed the prescribed limitation, it can be deducted from the expenses when calculating the enterprise income tax

3. TP documentation: According to the relevant tax laws and regulations of various countries and regions, taxpayers shall provide the relevant information or documents for preparation and filing of the related party transactions

4. The preparation, filing and submission of the same period data are the basis for the management of the transfer pricing documentation.

5. According to the enterprise income tax law, it is the duty for the enterprises to prepare the documentation for the current accounting period when the related party transactions have been occurred, which including the price of related party transactions, expense setting standard, calculation methods and specific transfer pricing documentation, to prove that the affiliated transaction of enterprises conforms to the Arm's Length Principle. It is the obligation for enterprise to file and provide the documentation to the competent tax authorities.

6. Documentation of  the year ,when the related party transactions occurred, must be prepared and completed before May 31 of the following year, and it shall be saved for 10 years

7. The content of the TP documentation include:
    a. Organization structure
    b. Production and operating plans
   c. Related transaction status
   d. Commeasurable analysis
   e. Transfer pricing method selection and use

Other reports shall be performed, which consist of  functional risk analysis, financial status analysis of the enterprise's annual related transactions, and the copies of related transaction contracts