China Outbound: Forecasts for 2016, Transfer Pricing Rules in ASEAN Nations

January 1, 2016 Posted by China Briefing Reading Time: 4 minutes

Our Latest Round-Up of Business News Affecting China-Based Businesses Investing in Asia

In this edition of China Outbound, we look into our crystal ball for foreign investment trends in 2016, featuring a piece of analysis from Andrew Polk, a senior economist, on the China business environment. We also include a piece on Myanmar’s new stock exchange, which might be the beginning of a new economic era in the country. Elsewhere, we draw attention to the transfer pricing rules in India and other ASEAN nations such as Thailand and Vietnam.

Andrew Polk’s 2016 China Economic Forecast – Weaker Growth and More Volatility to Come

2016 is set to be the most uncertain year for China’s economy since the Global Financial and Economic Crisis of 2008-2009 threw international markets into chaos and saw global trade grind to a halt. China’s domestic economy clearly remains on a weakening trend, and the government is likely to lower its official 2016 growth target down to “around 6.5 percent” from “around 7 percent” in 2015 – as actual 2015 GDP growth looks set to officially come in at about 6.8 percent.

Myanmar Opens New Stock Exchange – Beginning of New Economic Era?

On December 9, 2015, Myanmar’s new stock exchange – the Yangon Stock Exchange (YSX) – opened with big expectations. However, despite the grand opening and the US $24 million investment, the bourse will not be operational until February of 2016, or later. So is this really the beginning of a new economic era, or is the new move by the administration being rushed before the country is ready?

India Adopts Range Concept and Use of Multi-Year Data

India recently made a significant move towards aligning transfer pricing practices with global norms. The new rules, codified in October, introduced a “range concept” for determination of arm’s length pricing and “use of multiple year data” for performing comparability analysis in transfer pricing cases.

Thailand’s New Transfer Pricing Guidelines

Thailand’s vote this past May to implement a new transfer pricing law is expected to come into effect in the early part of the new year. Transfer pricing refers to the sale of goods or services between branches of a company or subsidiary companies to a parent enterprise, and most countries instate some form of transfer pricing regulations in order to ensure that sales between divisions of a company roughly mirror the cost of the same sale between separate enterprises.

An Overview of Transfer Pricing in Vietnam

Transfer pricing is a tax planning method where related companies enter into transactions among each other to shift funds, and thereby profits.

For instance, a parent company can extract funds from a subsidiary by having the issue a dividend, but the parent can also provide a service to subsidiary and charge it for the service. Dividends can only be issued after tax has been paid – after all, dividends are part of the profits.

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Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email china@dezshira.com or visit www.dezshira.com.

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