China Tightens Transfer Pricing Audits, Increases Scrutiny On Foreign-Domestic Deals

Sunnyvale, CA - In order to increase tax revenues, The Chinese State Administration of Taxation (SAT) continues to strengthen its transfer pricing audit methods.

The SAT is likely to increase its audit coverage to cover companies that have converted from manufacturing to service based entities, intellectual property transactions and issues like cost sharing, thin capitalization, controlled foreign corporations, etc.

Read more at http://www.nair-co.com/ChinaTransferPricing.aspx?hilite=china

SAT investigated 178 transfer pricing cases last year. The renewed focus on transfer pricing audits has generated additional revenues of over USD382 million (RMB2.5bn) for the tax authority in 2010 up almost a quarter compared to 2009 and double the amount in 2008.

National Security Review

After the enactment of a national security review (NSR) process for foreign acquisitions of domestic businesses, local administrative agencies are now keeping an eye out for foreign-domestic deals which might fall under the purview of the NSR system.

Read more at http://www.nair-co.com/ChinaTransferPricing.aspx?hilite=china

It is not clear as to how many foreign-local deals have undergone the NSR process. However, it appears that local commerce administrative agencies are going to look out for deals which might fall under the purview of the NSR process such as foreign-domestic deals involving national economic security or national defence security issues.

Read more at http://www.nair-co.com/ChinaTransferPricing.aspx?hilite=china

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This release was published on openPR.