Transfer Pricing and Tax Effective Supply Chain Management - Ernst & Young - China

What are the recent regulatory developments and their impacts on banking group’s financial services transfer pricing policies in the Asia region? Our leaders explained.

The profit split method is gaining ground against the transactional net margin method (TNMM) in China (pdf, 2.1mb). This article describes the limitations of TNMM, outlines the contribution analysis under the profit split method, and explains why the method applies well to foreign investment enterprises operating in China’s unique economic climate.

A recent request by China's State Administration of Taxation for the transfer pricing documentation of more than 40 banks clearly demonstrates the SAT’s focus on financial services transfer pricing and it's desire to ensure that Mainland China’s transfer pricing regulations are being appropriately followed. Find out what it means for documentation going forward and what should taxpayers be doing (pdf, 712kb).  

China's central government continues to take various measures to encourage the development of its offshore service outsourcing industry. One of the initiatives is to provide tax incentives to offshore service outsourcing enterprises. Learn more about which regulations may provide your organization with an exemption from Business Tax in mainland China (pdf, 696.7kb) .

On 30 December 2010 China's State Administration of Taxation (SAT)  published Chinese and English versions of the "China Advance Transfer Pricing Arrangement Annual Report (2009)", marking the first time China has published such a report on the APA program to external readership. In this issue of Transfer Pricing Headlines, we summarize key review notes and our observations of the 2009 APA Report (pdf, 335.2kb) .

We understand that the International Taxation Department of the China's State Administration of Taxation (SAT) is now in the process of developing a work system for special tax adjustment (pdf, 288.4kb) . The SAT also intends to collect feedback on the systems from state and local tax bureaus at provincial level throughout China. Read our March issue of Transfer Pricing Tax Alert.