With the development of economic and the social levels, offshore production is in full swing in many countries. Offshoring by multinational companies (MNCs) needs to take into account the effects of costs, tax differences, transfer pricing and other factors, and competition between companies may change their equilibrium strategies as well. We construct a model of two MNCs with competitive relationships, explore the impact of the tax difference and arm’s length regulation (ALR) on transfer pricing for two MNCs’ offshore production strategies. We find that: the ALR can restrict offshore production by MNCs to prevent unreasonable tax evasion. When the market is highly competitive and the tax is low, the profits of MNCs will increase, this may be due to the positive effects of healthy competition between MNCs. Moreover, our research can reflect the influence of tax rate difference and ALR on the MNCs, which provides a certain reference for MNCs in the competitive environment.