Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-19T20:29:05.978Z Has data issue: false hasContentIssue false

16 - Transfer pricing disputes in China

from Part IV - BRIC Countries

Published online by Cambridge University Press:  05 November 2014

By
Jinyan Li
Edited by
Eduardo Baistrocchi  and
Ian Roxan
Eduardo Baistrocchi
Affiliation:
London School of Economics and Political Science
Ian Roxan
Affiliation:
London School of Economics and Political Science
Get access

Summary

Introduction

Transfer pricing is a relatively new issue in the People's Republic of China. China opened its door to foreign investors in the late 1970s and multinational enterprises brought their transfer pricing practices to China. It was not until 1991 that China enacted the first transfer pricing law. As expected, China imported the arm's length principle to deal with the imported transfer pricing problem. Because the Chinese legal culture differs in many respects from that of OECD countries, especially the United States where the arm's length standard originated, adaptation of the OECD-based solution is inevitable. In addition, China's national interest in cross-border transfer pricing matters has changed over the past three decades, which has led to corresponding changes in China's approach to resolving transfer pricing disputes.

Following this introduction, section 16.2 provides a brief cultural and historical context for the arm's length principle in China. Section 16.3 discusses the implementation and administration of the arm's length principle. Section 16.4 examines the resolution of transfer pricing disputes in China under the domestic mechanism and the mutual agreement procedure (MAP) under bilateral tax treaties. In light of the Chinese national interests and existing legal culture, section 16.5 suggests that the future solution of the global transfer pricing problems lies in bilateral or multilateral advance pricing agreements and a pragmatic application of the arm's length principle.

Type
Chapter
Information
Resolving Transfer Pricing Disputes
A Global Analysis
 , pp. 634 - 666
Publisher: Cambridge University Press
Print publication year: 2012

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Li, Jinyan, Taxation in the People's Republic of China (New York: Preager Publishers, 1991)Google Scholar
Li, Jinyan and Paisey, A., Transfer Pricing Audits in China (New York: Palgrave Macmillan, 2007)CrossRefGoogle Scholar
Liu, Yongwei, A Study on Legal Issues related to Transfer Pricing (Beijing: Beijing University Press, 2004)Google Scholar
Jiang, Z., ‘China's Tax Preferences to Foreign Investment: Policy, Culture and Modern Concepts’ (1998) 18 NW J Int'l L and Bus. 549Google Scholar
Li, Jian, ‘The Rise and Fall of Chinese Tax Incentives and Implications for International Tax Debates’ (2007) 8 Florida Tax Rev. 670Google Scholar
Eichelberger, J. and Kelly, B., ‘Tax Planning Strategies in Response to China's Changing Tax Landscape: Issues and Structures to be Considered in a Post Tax Unification China’ (2007) 3 Asia Pac. Tax Bull. 140Google Scholar
DeSouza, G., ‘Structuring an Appropriate Transfer Pricing Policy’ (2008) 4 Asia Pac. Tax Bull. 309.Google Scholar
Li, Jinyan, ‘Fundamental Enterprise Income Tax Reform in China: Motivations and Major Changes’ (2007) 61 Bulletin for Int'l Taxation519Google Scholar
Li, Jinyan and Huang, H., ‘The Transformation of Chinese Enterprise Income Tax: Internationalization and Chinese Innovations’ (2008) 62 Bulletin for Int'l Fiscal Documentation275Google Scholar
Pereenboom, R., China Modernizes: A Threat to the West or Model for the Rest? (Oxford: Oxford University Press, 2007)Google Scholar
Potter, P. B., The Chinese Legal System: Globalization and Local Legal Culture (Routledge, 2001)Google Scholar
Liu, J. et al., Study on China's Taxation Legal System (Beijing: Taxation Science Research Institute, 2005), pp. 85–162Google Scholar
Meiyan, Yao and Ruyu, Hao, Study on Chinese Taxation Legal System (China Tax Press, 2005), pp. 663–9Google Scholar
Daqi, Zhu and Xiaxiang, He, ‘On the Foundation of Tax Court’ (2007) 3 Contemporary Law Review17Google Scholar
Jiguang, Zhai, ‘On the Establishment of Tax Court in China’ (2003) 4 Journal of Heilongjiang Administrative Cadre Institute of Politics and Law98Google Scholar
Yan, Li, ‘On the Establishment of Tax Court in China’ (2009) 4 Journal of Liaoning Normal University (Social Science Edition) 26 (in Chinese)Google Scholar
Alford, W., ‘The Limits of “Grand Theory” in Comparative Law’ (1986) 61 Wash. L Rev. 945Google Scholar
Chow, D. C. K., The History of Law in Imperial and Modern China, in the Legal System of the People's Republic of China (West Group Publishing, 2003)Google Scholar
Stephens, T. B., Order and Discipline in China: the Shanghai Mixed Court, 1911–1927 (Washington, DC: University of Washington Press, 1992)Google Scholar
Jones, W. C., ‘Trying to Understand the Current Chinese Legal System’ in Hsu, C. S. (ed.), Understanding China's Legal System: Essays in Honor of Jerome A. Cohen (New York: New York University Press, 2003) pp. 7–45Google Scholar
Mayeda, G., ‘A Normative Perspective on Legal Harmonization: China's Accession to the WTO’ (2005) 38 UBC Law Rev. 83Google Scholar
Ren, X., Tradition of the Law and Law of the Tradition (Greenwood Press, 1997), pp. 17–44Google Scholar
Vann, R., ‘Reflections on Business Profits and the Arm´s Length Principle,’ in Arnold, B. J., Sasseville, J. and Zolt, E. M. (eds.), The Taxation of Business Profits Under Tax Treaties (Toronto: Canadian Tax Foundation, 2004), p. 133Google Scholar
Qian, Li and Qinghui, Cai, ‘Some Thoughts on Perfection of Chinese Transfer Pricing Tax System’ (2008) 7 Fujian Tribune (Humanities and Social Sciences Monthly)34Google Scholar
Lee, T. V. (ed.), Contract, Guanxi, and Dispute Resolution in China (Taylor & Francis, 1997)
Peerenboom, R., China's Long March Toward Rule of Law (Cambridge: Cambridge University Press, 2002)CrossRefGoogle Scholar
Peerenboom, R. and Scanlon, K.‘An Untapped Dispute Resolution Option: Mediation Offers Companies Distinct Advantages in Certain Cases’ (2005) 4 China Bus. Rev36Google Scholar
Peerenboom, R. and He, X., ‘Rule of Law in China: Chinese Law and Business Dispute Resolution in China – Patterns, Causes, and Prognosis’ (2009) 4 E Asia L Rev. 1Google Scholar
Wang, G., The Chineseness of China (Hong Kong: Oxford University Press, 1991)Google Scholar
Edwards, R. R., Henkin, L. and Nathan, A. J., Human Rights in Contemporary China (New York: Columbia University Press, 1986)Google Scholar
Rong, Liu and Jian, Du, ‘The Protection of Taxpayer's Rights and Chinese Taxation Judicial Reform’ (2007) 1 Taxation Research51Google Scholar
Xiaoqiang, You and Zhifang, Wang, ‘Taxation Agreement and the Protection of Taxpayer's Rights’ (2007) 2 Taxation Research69Google Scholar
Qian, Li and Yu, Han, ‘Some Comments on General Anti-Avoidance Provisions in the Enterprise Income Tax Law of the People’s Republic of China’ (2008) 8 International Taxation in China68Google Scholar
Chengjuan, Zhou, ‘On the Core Values of Tax Law and the Protection of Taxpayers' Rights’ (2009) 4 Taxation Research60Google Scholar
Jianping, Wang, ‘The Concept of Taxpayers Right and the Relationship between the Government and Taxpayers’ (2008) 4 International Taxation in China57Google Scholar
Li, Jinyan, International Taxation in the Age of Electronic Commerce: A Comparative Study (Canadian Tax Foundation, May 2003)Google Scholar
Weiner, J. M., ‘Practical Aspects of Implementing Formulary Apportionment in the European Union’ (2007) 8 Florida Tax Rev. 630Google Scholar
Roin, J., ‘Can the Income Tax be Saved: The Promise and Pitfalls of Adopting Worldwide Formulary Apportionment’ (2007–8) 61 Tax L Rev. 169Google Scholar
Arnold, B. J. and McDonnell, T. E., ‘Report on the Invitational Conference on Transfer Pricing: the Allocation of Income and Expenses among Countries’ (1993) 13 Tax Notes1377Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×