Comprehensive transfer pricing advisory covering compliance, planning, controversy and implementation.Transfer Pricing
Steven Carey, Managing Director of Duff & Phelps' Transfer Pricing practice based in Hong Kong, was quoted in Bloomberg BNA's Transfer Pricing Report. The article discusses China's regional and local tax bureaus reviewing related-party Form G112000 to identify Chinese companies that use tax havens to sell into China. The new form requires Chinese companies to disclose the effective tax rates of foreign related parties. Steven said that, "practically speaking, it is unlikely the Chinese subsidiary will have access" to the information that would allow it to calculate an effective tax rate by the time the return is filed "if at all."
The State Administration of Taxation (SAT) are particularly interested in offshore entities like Singapore, Ireland and the Netherlands. However, Steven explains that the new reporting form "strengthens the case for using Singapore or Ireland, which are logical places to build up such economic substance through a regional principal entity with the presence of senior personnel" over other locations. "It is reasonable to conclude from a China perspective that the days may be numbered for structures on the aggressive end of the scale involving Mauritius, Cayman Islands, BVI or a myriad of other tax havens, without real or sufficient economic substance."