Revisiting Transfer Pricing in China: a Year of New Regulations – New Issue of China Briefing Magazine

Posted by Reading Time: 4 minutes

Tranfer pricing magazineThe latest issue of China Briefing Magazine, titled “Revisiting Transfer Pricing in China: a Year of New Regulations“, is out now and available to subscribers as a complimentary download in the Asia Briefing Publication Store through the month of September.

Contents

  • Navigating China’s New Transfer Pricing Regulations
  • Understanding Transfer Pricing Methods and Compliance in China
  • The Complexity of Transfer Pricing  for Intercompany Services

Transfer pricing has fast become one of the standout issues in international taxation. Put
simply, the practice concerns the price charged for intercompany transactions between
entities in different tax jurisdictions. These transactions can be used to shift funds within
a multinational company (MNC), making transfer pricing an effective means to manage a
firm’s finances and remit its profits.

As more international companies began to pour into China following its opening up period
in the late 1970s, the need for a transfer pricing regime that could effectively collect tax on
intercompany transactions and prevent tax base erosion became increasingly apparent.
Legislation on transfer pricing in the Middle Kingdom therefore has a relatively long history
that stretches back to the early 1990s, but the majority of this has been piecemeal, and it is
only in the last ten years that the country began implementing comprehensive regulations.
2016, in particular, has seen the release of new laws that have revamped transfer pricing
compliance for MNCs in China.

If implemented early in a Chinese entity’s business life, a transfer pricing system can
complement and support an MNC’s business model and commercial objectives, as well as
optimize its global effective tax rate. Non-compliance with China’s new transfer pricing laws,
however, can result in heavy penalties for an MNC, and subsequently eat into its bottom line.

In our 24 years of experience dealing with China’s idiosyncratic tax system, Dezan Shira
has closely observed and analyzed the development of the country’s transfer pricing laws.
In this issue of China Briefing, we provide a guide to navigating China’s latest regulations,
highlighting the main issues that exist for foreign companies, and explaining the various
transfer pricing methods and processes that exist.


About Us

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.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading

2016 China tax guideTax, Accounting, and Audit in China 2016
This edition of Tax, Accounting, and Audit in China, updated for 2016, offers a comprehensive overview of the major taxes that foreign investors are likely to encounter when establishing or operating a business in China, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who must navigate the complex tax and accounting landscape in China in order to effectively manage and strategically plan their China-based operations.
CB_2016_04_Establishing_and_Operating_a_Business_in_China_2016Establishing & Operating a Business in China 2016
Establishing & Operating a Business in China 2016, produced in collaboration with the experts at Dezan Shira & Associates, explores the establishment procedures and related considerations of the Representative Office (RO), and two types of Limited Liability Companies: the Wholly Foreign-owned Enterprise (WFOE) and the Sino-foreign Joint Venture (JV). The guide also includes issues specific to Hong Kong and Singapore holding companies, and details how foreign investors can close a foreign-invested enterprise smoothly in China.

Cover-250-x-350An Introduction to Doing Business in China 2015
Doing Business in China 2015 is designed to introduce the fundamentals of investing in China. Compiled by the professionals at Dezan Shira & Associates, this comprehensive guide is ideal not only for businesses looking to enter the Chinese market, but also for companies that already have a presence here and want to keep up-to-date with the most recent and relevant policy changes.