Page 42 - Doing Business in China

TAXATION

Overview of Chinese enterprise

(1) Organisational structure;
(2) Management structure;

(3) Industry description;
(4) Business strategy;

(5) Financial data for each type of business and product; and
(6) A description of reorganisations or transfers of intangibles that involve or affect the Chinese enterprise, and
how such changes affect it�

Related party relationships

(1) Information on related parties;
(2) Information on income taxes that apply to related parties, including names of such taxes, tax rates and any
preferential tax treatment; and

(3) Changes in related party relationships during the fiscal year�

Related party transactions

(1) Overview of related party transactions;
(2) Analysis of value chain;
(3) Outbound investment;

(4) Related party equity transfer;
(5) Related party services; and

(6) APAs in foreign countries and tax rulings directly relating to the enterprise’s related party transactions�

Selection and application of transfer pricing methods

(1) Selection of the tested party and rationale for the selection;
2) Selection of transfer pricing method and rationale for the selection (regardless of the method selected, the
enterprise must explain its contribution to the group’s overall profit or residual profit);
3) Any assumptions and judgements made in the process of determining the arm’s length prices or profits;

4) Application of reasonable transfer pricing methods and results of the comparability analysis to determine the
arm’s length prices or profits;
5) Other information to justify selection of the transfer pricing method; and

6) Analysis and conclusion on whether the transfer pricing policy of the related party transaction complied with
the arm’s length principle�

Doing Business in China 2023 | 41