Simplified Procedure for Unilateral Advance Pricing Arrangements in China

Summary

---

|

• Matters that are not specified in Announcement No. 24 must be subject to the provisions of Announcement No. 64
• The general procedure and the simplified procedure are not mutually exclusive, and qualified enterprises may choose to apply either one depending on their own considerations and circumstances
• Announcement No. 24 simplifies the procedures for unilateral APAs into three stages, namely, application for assessment, negotiation and signing, and monitoring of execution

Advance Pricing Arrangements (APAs) are generally regarded as a useful tool for taxpayers pursuing tax certainty for affiliated party transactions. In 2016, the PRC State Taxation Administration (STA) published the Announcement on Matters Relevant to Improving the Administration of Advance Pricing Arrangements (Announcement [2016] No. 64) (Announcement No. 64) (关于完善预约定价安排管理有关事项的公告) regulating the administration of APAs and improving the negotiation and signing process. According to Announcement No. 64, an enterprise may reach an APA with competent tax authorities on pricing principles, as well as calculation methods for its affiliated party transactions in years to come. An APA can be unilateral, bilateral or multilateral.