As an effort to tackle tax base erosion and profit shifting, China tax authorities have been focusing on transfer pricing administration by enforcing stringent strong local-flavoured transfer pricing regulations/rules, imposing detailed compliance requirements and invoking ever-increasing scrutiny on related party transactions. Since there are only limited levels of tax appeal in China, most taxpayers will want to avoid a tax dispute getting to the assessment stage. In this connection, the companies should therefore assess their risks and document their transfer pricing policies in their China operations.