Preparing Transfer Pricing Documentation

Beginning in 2008, the State Administration of Taxation in China introduced a mandatory requirement for taxpayers to prepare and retain detailed transfer pricing documentation to support the arm's length nature of their related party transactions.

This article discusses which entities need to comply with the requirement and what needs to be included in a company's contemporaneous transfer pricing documentation.

Transfer pricing documentation needs to be completed by May 31 of the year following the tax year. The documentation must be in Chinese and must be provided with 20 days of a request. It should be retained for 10 years from June 1 of the relevant tax year.

To read the full version of this article, please purchase the March 2010 issue of China Briefing, which can be found in the Asia Briefing Bookstore. Companies requiring assistance may contact any Dezan Shira & Associates' nine national offices at china@dezshira.com for advice or visit www.dezshira.com.