{"id":385,"date":"2022-02-17T09:10:15","date_gmt":"2022-02-17T09:10:15","guid":{"rendered":"https:\/\/msadvisory.com\/?post_type=k_service&p=385"},"modified":"2026-04-27T18:37:31","modified_gmt":"2026-04-27T18:37:31","slug":"tax-advisory","status":"publish","type":"k_service","link":"https:\/\/msadvisory.com\/service\/financial-advisory\/tax-advisory\/","title":{"rendered":"China tax advisory for foreign-invested companies"},"content":{"rendered":"\t\t
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China tax advisory for foreign-invested companies<\/h1>\t\t\t\t<\/div>\n\t\t\t\t
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Minimize your China tax burden while staying fully compliant. Our advisory team designs tax-efficient structures, navigates double taxation treaties, and delivers proactive planning for corporate income tax, VAT, and withholding tax.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t

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9<\/div>\n
Jurisdictions<\/div>\n <\/div>\n
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1,500+<\/div>\n
Clients Served<\/div>\n <\/div>\n
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15<\/div>\n
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Overview: Transfer Pricing in China<\/h2>

Transfer pricing in China is regulated by Article 13 of the Income Tax Law for Foreign Investment Enterprises and Foreign Enterprises, and Article 24 of the Law Concerning the Administration of Tax Collection.\u00a0 These regulations, initially introduced in 1991 to attract foreign investment, have been strengthened through subsequent rulings issued by the State Administration of Taxation (SAT).\u00a0 China’s transfer pricing regime, drawing on international best practices like those from the OECD and US, mandates that transactions between a multinational’s headquarters (or related parties) and its Chinese subsidiary adhere to the arm’s-length principle.\u00a0 Entities are considered associated based on either ownership (at least 25% shareholding, loans comprising at least 50% of owner’s capital, or loan guarantees of at least 10% of total loans) or control (legal representative or over half of directors\/management appointed by another organization, operational dependence on another’s proprietary technology, or control over raw material purchases\/product sales).\u00a0 Once deemed associated, companies must classify and price all inter-entity transactions – involving tangible and intangible assets, as well as services – according to the arm’s-length principle.<\/p>

China TP Compliance at a Glance<\/h3>
Document<\/th>Who Must File<\/th>Content Focus<\/th>Due Date<\/th><\/tr><\/thead>
Master File<\/strong><\/td>Chinese entities in a group where the ultimate parent already prepares one, or cross-border related-party transactions > RMB 1bn<\/td>Group-level structure, global business, intangibles, financing, tax positions<\/td>Within 12 months of fiscal year-end<\/td><\/tr>
Local File<\/strong> (Detailed TP Doc)<\/td>Tangible goods transfers > RMB 200m; financial assets > RMB 100m; intangibles > RMB 100m; services\/other > RMB 40m<\/td>Entity-level related-party transactions, value chain, benchmark analysis<\/td>By June 30 of the following year<\/td><\/tr>
Country-by-Country Report<\/strong><\/td>Ultimate parent of a group with consolidated revenue > RMB 5.5bn<\/td>Revenue, profit, tax, employees and assets by jurisdiction<\/td>Annual CIT filing (May 31)<\/td><\/tr>
Special File<\/strong><\/td>Cost-sharing arrangements or thin-capitalization (debt-to-equity: 5:1 financial \/ 2:1 other)<\/td>CSA details or thin-cap justification<\/td>By June 30 of the following year<\/td><\/tr><\/tbody><\/table><\/div>

Transfer Pricing Methods in China<\/h3>