International Law

Preparation the key to transfer pricing documentation requirements

By China Briefing

By Steven Carey, Douglas Fone and Dr. Jian Li

HONG KONG, Jan. 22 - The Implementing Regulations that have been in effect from January 1, 2008 for the new Corporate Income Tax Law are the result of several years of deliberation by the State Administration of Taxation on transfer pricing. Tax authorities globally have been focused on transfer pricing for some time and in most countries have introduced tough laws requiring taxpayers to demonstrate compliance with the arm?s length principle for pricing of transactions within multinational groups. It is no surprise that the Chinese authorities are doing the same in their bid to claim a fair share of the global tax pie, through the introduction of transfer pricing penalty provisions and rigorous documentation requirements.

The new CIT Law and Implementing Regulations
Although transfer pricing has been around in China for a few years, and several SAT circulars have been released providing guidance to local authorities on enforcement, the new CIT Law and Implementing Regulations now provide the necessary legislative framework and send a very clear signal to taxpayers that transfer pricing is at the top of the SAT?s target list for the foreseeable future. (more…)

Full post as published by China Briefing Blog on January 22, 2008 (boomark / email).