On 13 July 2015, the State Administration of Taxation (SAT) released the Public Notice regarding Refining the Filing of Related Party and Administration of Transfer Pricing Documentation (SAT Public Notice  No. 42, hereinafter referred to as the “Public Notice 42”). Public Notice 42 replaces the provisions on Related-Party Reporting and Transfer Pricing Documentation (TPD) in the previous Guo Shui Fa  No. 2, Implementation Measures of Special Tax Adjustment (Trial) (hereinafter referred as “Circular 2”) and Annual Reporting Forms for Related-Party Dealing of Enterprises of the People's Republic of China (Guo Shui Fa  No. 114).
Public Notice 42 introduces a series of new compliance requirements which include a three-tiered approach for TPD (i.e. master file, local file, and special issue file). In the meantime, Public Notice 42 stipulates 22 RPT Forms (previously 9 forms) for taxpayers’ preparation and submission. It is suggested that people responsible for the financial and tax matters in an enterprise should pay sufficient attention to these substantial changes, timely revisit and monitor the transfer pricing arrangements in place, and make necessary preparation where applicable.
Then, how to better understand these new and complicated requirements in China and prepare for the compliance task in an easier manner? PwC China and Hong Kong Transfer Pricing Service Team have developed a 90-second-length video to take you through the new TPD requirements in China.
Should you have any questions or service requirements, please feel free to contact PwC China Transfer Pricing Service Team to further understand the transfer pricing compliance requirements newly introduced by China or other related issues.