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Transfer Pricing in Shenzhen
The enforcement of transfer pricing regulations has become more stringent in the PRC. For instance, the Shenzhen Local Tax Bureau (SLTB) recently distributed a set of information request forms to 300 companies and required them to respond within a short period of time. We understand that the tax authorities will use the collected information to identify potential audit targets. In light of this, it is extremely important that the companies be cautious when providing the information to the SLTB.
If your organisation has received SLTB's information request or has been selected for an audit or transfer pricing review, our transfer pricing specialist team can provide risk management and defense support services to your organisation.
Shenzhen Local Tax Bureau Issued New Notice on Related Party Transactions Filing Requirement for FIE/FE
In August 2002, Shenzhen Local Tax Bureau ("SLTB") issued Shendishuifa [2002] No. 392 ("the Notice") requiring all Foreign Investment Enterprises ("FIE") and Foreign Enterprises ("FE") located in Shenzhen to file the Annual Disclosure Forms of FIE/FE on Related Party Transactions ("the Forms").
All FIE/FE are required to obtain a copy of the Forms from local tax bureaus by 20 August 2002 and to file the Forms with local tax bureaus by 5 September 2002.
From the fiscal year 2003 onwards, all FIE/FE are required to obtain the Forms before 31 January and file the Forms with the local tax bureaus together with the annual tax returns within four months after the financial year-end.
Compared to the previous compliance of related-party disclosure, the Forms include 40 pages of tables that require all FIE/FE to disclose detailed information for the fiscal years 1998 to 2001 which would be collected by the SLTB for further analysis. In the Forms, all FIE/FE are required to disclose not only details of related party transactions also various financial information including balance sheets, income statements, cash flows, manufacturing and administration expenses etc.
The Notice states that FIE/FE would be subject to penalties if failing to meet the filing due date or disclose the correct information. |
