Transfer Pricing Agreement China

D.2.4.8.3. Extending the statute of limitations is to eliminate the disadvantages that developing countries face in terms of transfer pricing management. For example, the statute of limitations for corporate tax in China is generally five years. However, the limitation period for transfer pricing has been increased to 10 years, which has given the tax authority more time to consider issues related to taxpayer transfer pricing. Another option is to set clear rules for compliance, bear the burden of proof on taxpayers, and encourage taxpayers to comply and adapt themselves if necessary. It was found that transfer pricing documentation requirements, coupled with criminal rules, have very effectively encouraged taxpayers to comply with the rules. An industry-wide or group-wide audit of the MNE was also a very effective and effective way for the tax authorities to use its limited resources to maximize its benefits. In China, however, all tax payers are required to establish transfer pricing documents, unless they fall into the following categories: the Changchun Tax Administration`s TP team found that the value of land use rights controlled by the joint venture had increased significantly over the ten years in which they were held (acquired at a relatively low price). The value of the land was indicated in the EC books using the cost method. The authorities rejected this measure as a valid measure of the value of the length of the arm for determining the share transfer price and required market valuations.

Subsequently, an evaluation was carried out by professional companies and a tax adjustment of approximately RMB50 million was made. D.2.4.1.1. China shares many concerns with other developing countries regarding transfer pricing management. As a relatively late starter in this region, China has used OECD guidelines on transfer pricing and the experience of industrialized countries. In the meantime, China faces many challenges, including the lack of appropriate comparability; quantifying and allocating location-specific benefits; identification and evaluation of intangible assets for which OECD transfer pricing guidelines have not provided easy solutions. D.2.2.7. In accordance with BEPS 13, Public Notice has adopted 42 clauses requiring qualified tax payers to submit national reports (CBC) in China. Other measures related to the transfer of financial documents were also included in the notice. In addition, the SAT intends to update the rules to clarify how taxpayers can access the U.S. APP program and map mechanism, as well as specific tax adjustment investigation procedures.

D.2.2.3. The first aspect of the three-way system is administration.is a system for tracking the benefits of MNEs in China. The Chinese SAT placed particular emphasis on routine verification of related parties` statements and simultaneous transfer pricing documentation. As a result of transfer pricing controls, follow-up monitoring has been put in place to encourage taxpayers to make their profitability more in line with the length principle. The second element is an initiative on tax services, with seminars and trainings that are made available to inform taxpayers of the latest tax rules and policies. Efforts to avoid or eliminate double taxation have been reinforced by unilateral/bilateral pre-price agreements (ASAs) and problem-solving through pop. With regard to the last aspect, the survey, isolated and coordinated anti-prevention audits were carried out in order to regulate the profitability of controlled enterprises and industries. D.2.2.8. In China, more than 800,000 tax officials work either in state tax administrations or in local tax offices, which are created at the provincial level (67 in total), at the local level (666 in total) and at the county level (88,996 in total).