IN THIS ISSUE:
Transfer Pricing and Services
The increasing number and variety of Chinese cross-border intercompany services has caused tax authorities to increase their focus on transfer pricing related to services. Inconsistent treatment by different tax authorities continues to be problematic. Page 1
Capital Gains Tax & Substance Over Form
Using Circular 698, tax authorities citing substance over form imposed capital gains tax on a transaction. The Buyer, the Seller, and the Holdco were not Chinese resident enterprises but tax was imposed by disregarding Holdco and viewing the transaction as a direct equity transfer. Page 1
Property Value Escalation
The recent significant escalation in the value of real property in China may result in the enactment of a property tax. Officials are becoming increasingly concerned over income disparity resulting in adverse implications for high earners. Page 3
Business in China
There are several methods to effectively implement exclusive distribution agreements. Key non-legal strategies can help your company protect its intellectual property. Page 6
Mergers and Acquisitions in China
Regulations relating to M&As in China lack coherence and are quite inconsistent making tax analysis and planning vitally important. Page 13
Snapshot
The introduction of new Chinese Accounting Standards, converged with IFRS, marks a significant step towards a single global accounting language. Page 15
