Transfer priciing in China

Transfer priciing in China

 

Braxton is an international tax specialist in transfer pricing.  This also covers China. Years ago, when we actively represented corporate clients in Chinese tax matters, there was not a transfer pricing "problem" for smaller wholly foreign enterprises, as the number of SAT specialists was so small that they could only delve into matters of corporate entities far larger than those I represented. But now it is quite different. On July 12 Circular 323 was issued by the SAT. The SAT is beginning a nationwide inspection of transfer pricing documentation. Local authorities have been instructed to select for audit for years 2008 and 2009 a minimum of 10 percent of taxpayers who have related-party transactions. While we don't know if this instruction filtered down to all levels of SAT offices, we do know that it has reached the Guangzhou SAT. It is time for some of those smaller businesses - the type that we used to work with - to be concerned about having their transfer pricing documentation in order. From what we hear, it will be more than the minimum of 10 percent who will be audited.

 

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