Transfer Pricing and Anti Tax Avoidance

One of the highlights of the “Enterprise Income Tax Law of the People’s Republic of China” that came into effect on January 1, 2008 is that for the first time at the level of tax law, it stipulates the “special tax adjustment” system, tax treatment principles for related-party transactions, and anti-tax avoidance measures. Principled provisions were made. This shows the country’s determination to strengthen transfer pricing management and anti-tax avoidance management of affiliated enterprises. With the gradual implementation of the BEPS plan in China, China continues to increase its efforts in corporate transfer pricing management, and the tax amount for transfer pricing adjustments is increasing year by year.

For enterprises with frequent related-party transactions and huge transaction amounts, especially those that are the focus of transfer pricing review announced by the state every year, strengthen the prior management of related-party transactions and actively seek external expertise when the tax authorities conduct transfer pricing audits of the company. Personnel support is particularly important.

Mingshui’s transfer pricing team will provide companies with the following professional services in transfer pricing:

*Corporate transfer pricing policy risk assessment;

*Transfer pricing policy management;

* Preparation of transfer pricing contemporaneous documents;

*Transfer pricing investigation response and defense;

* Appointment pricing negotiation;

*Assist enterprises in drafting or reviewing cost sharing agreements;

*Other anti-tax avoidance investigation response and assistance.

Case Presentation

Provided contemporaneous document consulting services to a software development company in Beijing and several domestic companies, including specific transfer pricing documents such as prices, fee setting standards, calculation methods and instructions for related-party transactions, to prove that the company's related-party transactions comply with the arm's length principle;

Provided contemporaneous document consulting services to a well-known education and training company in Beijing, including specific transfer pricing documents such as prices, fee setting standards, calculation methods and instructions for related-party transactions, to prove that the company’s related-party transactions comply with the arm's length principle;

Provided economic analysis and consultation on related-party transactions to a machinery company in Tianjin. Based on the relevant information and data provided by the company, the company's related-party transactions were judged through indicators such as the full cost markup rate, thereby proving that the company's related-party transactions complied with the arm's length principle;

Provided economic analysis and consultation on related-party transactions to a trading company in Jiangsu, searched for comparable companies through database screening, and analyzed the company’s related-party transactions through factors such as revenue, price, profit before interest and tax, and full cost markup to prove that the company’s related-party transactions comply with Arm’s length principle;

Provided economic analysis and consultation on related-party transactions to a technical service company in Shenzhen, searched for comparable companies through database screening, and analyzed the company's related-party transactions through factors such as revenue, price, profit before interest and tax, profit before interest and tax, etc., to prove the company's related-party transactions. Comply with the arm’s length principle.

Professional Team