What is related party fund borrowing?

Legal analysis: Related party borrowing is a common short-term financing method for enterprises to transfer their temporarily idle funds to other enterprises at a certain price. But this kind of lending is usually ineffective because it violates the law. The regulations of the People's Bank of China prohibit non-financial institutions from engaging in financial business, so non-financial institutions cannot engage in such loan business.

Legal basis: Article 36 of the Law of People's Republic of China (PRC) on the Administration of Tax Collection, the price and expenses shall be charged or paid according to the business dealings between the enterprises, institutions and places engaged in production and operation established by foreign enterprises in China and their affiliated 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.