SAT Issued New Rules on Reporting of Related Party Transactions and Contemporaneous Documentation

Tax Analysis:13 July 2016/China

On 29 June 2016, the State Administration of Taxation (SAT) issued new regulations (i.e. SAT Bulletin [2016] No. 42, or Bulletin 42) to improve the reporting of related party transactions and contemporaneous documentation. Bulletin 42 will replace the existing transfer pricing documentation regulations in Circular Guoshuifa [2009] No. 2 (Circular 2). In contrast with Circular 2, which comprehensively covered various aspects of special tax adjustments, Bulletin 42 is only concerned with the reporting of related party transactions and contemporaneous documentation. (Tax Analysis:13 July 2016/China)

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Bulletin 42 addresses issues that have been the focus of the Chinese tax authorities for a number of years, addressing practical issues they have experienced, and provides a new landscape for transfer pricing practice and management in China. Additionally, the localization and implementation of BEPS Action 13 in China is a new milestone in the internationalization of China's transfer pricing practice.

This newsletter covers the following topics regarding Bulletin 42;

(1) Recognition of related party relationships and related party transactions
(2) Reporting of related party transactions
(3) Contemporaneous documentation
(4) Legal liabilities
(5) Deloitte’s observation


>> Click for Japanese [中国国家税務総局が関連者間取引申告と同期資料の管理に関する公告を公布]

(119KB, PDF)

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