China SAT Issues Its First APA Report
The China State Administration of Taxation (SAT) on 30 December 2010 issued its first-ever annual report regarding its advance pricing arrangement (APA) program. The report, titled "China Advance Pricing Arrangement Annual Report (2009)", includes an introduction to China's APA program, implementation procedures, and development of APA practices in China.
- (1888PressRelease) January 29, 2011 - Shanghai - An APA is an agreement on the methods and principles of the pricing and profit of related party transactions, agreed in advance between tax authorities and taxpayers. The APA program allows a company to agree the arm's length nature of related party transactions for up to five years in advance with the tax authority, rather than having to defend the arm's length nature of related party transactions at the end of each year. This enables companies to plan their future tax liabilities, reduces their risks of non-compliance, and minimizes the time and cost of determining and defending their actions on a yearly basis.
In recent years, the SAT has been steadily promoting and developing its APA program. From 2005 to 2009, Chinese tax authorities concluded and signed 41 unilateral APAs and 12 bilateral APAs, and there are still several APAs under examination. Interestingly, the trend has been towards bilateral APAs (which exceeded unilateral APAs for the first time in 2009).
Of the concluded APAs:
• 62% involved transactions for tangible goods, 19% for intangibles and 19% for services;
• Almost 60% were negotiated and finalized in less than one year;
• 60% involved the TNMM, 26% the cost plus method, 7% the CUP, 3.5% profit split and 3.5% other methods.
If you are interested in a copy of the APA report or would like more details on our services in China, please contact:
Steven Carey
s.carey ( @ ) tpa-global dot com
+852 9516 2830
Douglas Fone
d.fone ( @ ) tpa-global dot com
+61 (0)2 8249 8145
Dr Jian Li
j.li ( @ ) tpa-global dot com
+86 21 5116 0571
About Transfer Pricing Associates:
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