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With the influence of global economic situation, investigation into transfer pricing has been strengthened constantly all over the world. More than 60 countries and religions in the world have already put forward relevant provisions about transfer pricing until 2009. Chinese tax authority put forward a series of transfer pricing managerial system in 2009, notice of the State Administration of Taxation on Issuing the Measures for the Implementation of Special Tax Adjustments (for Trial Implementation) in Jan. laid the foundation for new transfer pricing managerial system, especially. This notice refers to foreign mature anti-tax evasion management measures containing general anti-tax evasion terms.
Key points of the investigation into transfer pricing
In the Notice (No. 85 of the State Administration of Taxation), the State Administration of Taxation clearly request that the tax authorities of China should strengthen the investigation into anti-tax evasion in key industries, specifically including:
doing a good job in investigation into clothing and footwear trade, electronic and communication equipment manufacturing, OEM industry and so on;
pursuing breakthrough in investigation into fast food industry, large retail business, beverage - producing industry, elevator industry, car industry and so on;
focusing on investigation into transfer pricing in financing of high-way and other infrastructure construction and tire manufacture industry, tragacanth industry, hotel industry and so on, which are influenced a little by the financial crisis, and intensifying the adjustment and make-up of taxes to improve the overall profit level of industries.
It needs to be emphasized that the transfer pricing are related to related-party transaction between different countries and religions. A enterprise should consider the transfer pricing policies all over the world when completing compliant obligations of transfer pricing in single country or religion. At present time, China tax authority is enlarging the cooperation and communication with external authorities, which makes investigation into transfer pricing become more and more comprehensive and multivariate, and makes implementation of transfer pricing adjustments become more and more strict.
Under the new anti-tax evasion administrative circumstance in China, enterprises which carry out foreign-related related-party transaction should take measures actively to deal with the risks brought by transfer pricing. Enterprises should make appropriate adjustments to transfer pricing arrangement in China, in order to avoid, coordinate or solve the transfer pricing dispute.
Scope of the service:
HWUASON has the professional tax lawyer team to offer service as follows:
■ risk assessing——preventing enterprises from being investigation objects
Investigating the transfer pricing strategy, tax burden structure and so on of enterprises and assessing the risks, in order to understand the points that tax authority may focus on and compile adjustment suggestions and programs, which can reduce the possibility to be investigated.
■ defensive documents——assisting enterprises to formulate detail file about pricing policy
Defensive documents are generally used to give preliminary respondent to the questions about transfer pricing asked by tax authority, and it has higher overall requests than general simultaneous materials. HWUASON can assist enterprise to formulate appropriate coping strategy and compile and submit detail file which has legal persuasion on key points.
■ program designing——guaranteeing that enterprises can copy with the investigation and adjustment orderly
After receiving the notice about investigation into special tax adjustments, HWUASON can assist enterprises to formulate coping program at every stage and participate in all kinds of coordination work with investigation authority. In accordance with legal way and procedure, we can give rational respondents and explanation to investigation questions asked by tax authority, in order to avoid risks caused by offering inappropriate or wrong information.
■ negotiation——doing best to minimize the pricing adjustment loss of enterprise
During the negotiation with tax authority, there will be many various reasons affecting the adjustment program. Therefore, enterprises always can not identify the key points, which lead to the ineffective of negotiation. In addition to technical support, the final result of negotiation depends on the bilateral communication and negotiation skills. HWUASON can assist enterprises to complete adjustment program negotiation and final confirmation, especially help client to identify one or more key points which may affect the adjustment program and negotiate with tax authority on that points to avoid total passive adjustment and minimize the pricing adjustment loss.
■ legal compensation——protecting the legal tax interest of enterprises
Investigation into anti-tax evasion belongs to tax administrative act. If enterprises are against to the final adjustment suggestion of tax authority, HWUASON can assist enterprises to enter administrative judicature procedure to protecting the legal tax interest of enterprises via administrative reconsideration, litigation and so on.
As the first professional tax law firm in China, the transfer pricing team in HWUASON has rich experiences to face the investigation into anti-tax evasion and solve dispute. What’s more, we has multi-layered communication and maintains good relation with the State Administration of Taxation and all the tax authorities of China, which can let us assist clients to communicate with tax authority effectively.
Advantages of HWUASON:
■ taking full advantages of legal ways to protect legal tax interest of enterprises
■ balancing the requirements of enterprise and tax authority, and perfecting the existing pricing strategy of enterprise
■ establishing rational and multivariate pricing mechanism to offer clients more choices