Transfer Pricing in China – New Report from Dezan Shira & Associates

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TLR-Transfer Pricing in China_coverTransfer Pricing in China, the latest report from Dezan Shira & Associates, is out now and available through the Asia Briefing Bookstore for complimentary download. When a business transaction occurs between businesses that are controlled by the same entity, the price is not determined by market forces, but by the entity controlling the two businesses. This is called transfer pricing. An example is a transaction between a parent and its subsidiary, or other intra-group transactions.

These transactions can be used to shift funds – and thereby profits. Such transactions can serve as a tool for finance and tax planning. 


  • How Does Transfer Pricing Work?
  • The Risks and Requirements of Transfer Pricing
  • Transfer Pricing Services from Dezan Shira & Associates 

China’s foreign currency control regulations only allow one dividend issuance to a foreign entity a year. Moving funds out of China by using inter-company transactions can then offer a solution. 

In this report on transfer pricing, we discuss what types of transactions foreign investors can use to shifts funds in this way. Double taxation agreements between countries play an important role in transfer pricing. These allow foreign investors considerable tax savings when using offshore holding companies – under certain conditions.

Intra-group transactions often serve a legitimate purpose, but tax authorities around the world are wary of their use in lowering corporate profits. China is no different. Like in other countries, the Chinese tax office sets standards as to what transactions are acceptable. Those that do not meet these standards are not recognized.

If done properly, transfer pricing can save a foreign investor a substantial amount on their tax bill. However, careful planning is advised: transfer pricing transactions are under special scrutiny. In case of non-compliance, the back taxes and penalties can be severe.

Dezan Shira & Associates can assist your company in planning transfer pricing transactions, and furnishing the required documentation. If you would like to learn more about transfer pricing and how we might assist you, please do not hesitate to contact us.


Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email or visit

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