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| What you should expect in the forthcoming China transfer pricing documentation requirements? |
The China Corporate Income Tax Law ("the Law") promulgated on 16 March 2007 provides a new tax framework designed to be more relevant to China's future economic and developmental needs. Numerous new tax features are introduced and key areas are emphasized, including significant transfer pricing rules which will take effect from 1 January 2008. The incorporation and enhancement of the transfer pricing rules in the new Law signifies that China is taking a more aggressive approach to transfer pricing and companies should assess their readiness to comply with China's relevant transfer pricing regulations.
One of the key transfer pricing considerations for multinationals will be that the cost of underpayment of tax arising from a transfer pricing adjustment will be increased by imposing an "interest levy" on the tax underpaid. This interest levy includes both a financial interest component and a 'penalty' component. The penalty component will not be applied if the relevant transfer pricing documentation has been prepared and submitted by taxpayers in a timely manner.
A web seminar has been organised on 14 December 2007 for our clients and key contacts covering the CIT Law - transfer pricing documentation requirements. In this webcast, PwC tax partners and professionals aim at providing insights into the latest thinking behind various proposed transfer pricing rules, ranging from cost sharing to transfer pricing documentation requirements. In particular, the State Administration of Taxation ("SAT") of China has been planning for more stringent transfer pricing documentation requirements since as early as 2005. Our latest information indicates that the "Measures for Administration of Documentation on Related Party Transactions" (the "Documentation Requirements") are in their final draft stage. We summarised the various important provisions included in the final draft, and more importantly, share our insights on what the Documentation Requirements would mean for multinationals. Taxpayers should take note of the potential implications arising from the final draft Documentation Requirements, evaluate the impact on their operations and consider taking proactive actions, where applicable.
Participants can gain a deeper understanding on the following key discussion topics:
- The background of the Documentation Requirements;
- The details of the Documentation Requirements;
- The Documentation Requirements' implications to China tax authorities;
- The Documentation Requirements' implications to China taxpayers; and
- Suggestions to China taxpayers in light of the changing transfer pricing landscape.
Presentation slides
Download our China's new Corporate Income Tax Law - transfer pricing documentation requirements: archived webcast presentation slides (pdf file, 810KB) for your reference. |
