Perfecting an advance pricing agreement application in China
February 16, 2017 | BY
Katherine Jo &clp articlesMNCs managing tax audit risks in China must conduct a complete analysis in response to the new APA rules that set higher submission standards and require greater disclosure
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China's State Administration of Taxation (SAT) has released new rules for advance pricing arrangements (APAs), signaling that the authority is willing to work more closely with multinational companies (MNCs), align with global audit standards and construct a more advanced framework to plug tax loopholes.
On October 11, 2016, the SAT released the Announcement on Matters Relevant to Improving the Administration of Advance Pricing Arrangements (Announcement), replacing the APA rules under Chapter 6 of Guoshuifa [2009] No.2 (Circular 2). The new Announcement, which came into effect on December 1, revamped the APA application procedure and requirements. Soon after, on December 23, the SAT issued the 2015 China Advance Pricing Arrangement Annual Report (2015 Report), which summarizes China's APA practice throughout 2015 and reaffirms the tax authority's expectations of improving the quality and efficiency of APA applications.