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LEGAL: Announcement On Special Tax Investigations, Adjustments And Mutual Agreement Procedures (PART 3)
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ANNOUNCEMENT ON SPECIAL TAX INVESTIGATIONS, ADJUSTMENTS AND MUTUAL AGREEMENT PROCEDURES
(PART 3)

BT 201710 LEGAL 01
      国税总局于2017 年 3 月 28 日发布了大家翘首以待的《特别纳税调查调整及相互协商程序管理办法》的公告(2017 年 6 号公告)。随着 6 号公告的推出,纳税人能够更加清楚地了解税务机关在转让定价调查中的关注点,6 号公告也为转让定价调查调整机制带来一定的明确性。我们预见未来的中国转让定价调查工作将日益规范化。本期我们将继续介绍公告相关内容。

      6号公告中关于劳务的特定条款进一步结合国税总局的立场,从 16 号公告的规定与执法实践中探索出如何界定关联方劳务交易是否符合独立交易原则。其中,第 34 条规定,符合独立交易原则的关联劳务交易应当是受益性劳务交易,并且按照非关联方在相同或者类似情况下的营业常规和公平成交价格进行定价。6号公告规定受益性劳务是指能够为劳务接受方带来直接或者间接经济利益,且非关联方在相同或者类似情形下,愿意购买或自行实施的劳务活动。第 35 条规定关联方提供的几种劳务不属于受益性劳务;第 36 条提出了确定关联劳务交易价格的直接和间接方法,这与 BEPS 第8-10 项行动计划报告中的建议相符。另外,第37-46条明确了税务机关进行特别纳税调整调查时的调整程序、行政复议、补缴税款和利息,以及变更注销等问题。”第47-61条 明确了企业进行相互协商程序的各种细节问题。确定施行前已受理但尚未达成一致的相互协商案件,适用本办法的规定。与 56 号公告中规定向省国税局提起相互协商程序申请的要求有所不同,6 号公告规定与特别纳税调整事项相关的相互协商应直接向国家税务总局提起申请。负责特别纳税调整事项的主管税务机关(通常为省级税务机关)应当在收到相互协商协议通知书后,向企业送达相互协商协议以及监控执行补(退)还税款情况。
BT 201710 LEGAL 034. INTRA-GROUP SERVICES

The most significant improvement in Article 34, 35 and 36 of Announcement 6 for intra-group services in comparison with Announcement 16 is the introduction of the concept of ‘beneficial services’ for determining whether the services between related parties are in line with an arm’s length principle.

  a. Article 34 defines intra-group services that meet an arm’s length principle as beneficial services that are priced in the normal course of business and the fair transaction price with non-related parties under same or similar circumstances. The term ‘beneficial services’ is further defined as services that can bring direct or indirect economic benefits to the service recipients, which the non-related parties are willing to buy or carry out by themselves under the same or similar circumstances.

  b. Article 34 also addresses two-way related party transactions for intra-group services.

  c. Article 35 is generally in consistency with the six listed exclusions of non-deductible service fees in Announcement 16. However, some revisions are made for clarification of non-beneficial services based on the said exclusions.

     i. Service accepted by the service recipient from its related party that has already been procured or carried out by itself.

      ii. Service accepted by the service recipient from its related party and carried out to exercise control, management and supervision by the enterprise with a view to protect the investment interests of a direct or indirect investor. The service activities mainly include:

     1. Services rendered for shareholders’ activities such as shareholder meetings, board meetings and share issuance etc.;

         2. Activities related to the preparation and analysis of the operating report or financial report of the direct or indirect investor, headquarters and regional headquarters of the service recipient;

        3. Funding activities related to the operation and capital management of direct or indirect investor, headquarters and regional headquarters of the service recipient;

          4. Activities related to finance, taxation, personnel and legal etc. carried out for the needs of decision making, supervision, control and compliance of the group; and

           5. Other similar circumstances.

     iii. Service accepted by the service recipient from its related party that is not specifically carried out for the service recipient but which has obtained an incidental benefit as an affiliate of the group. Service activities mainly include:

         1. Restructuring activities of the group such as change in the legal form, debt restructuring, share acquisition, asset acquisition, merger and split-off that may bring the resource integration and scale effects to the service recipient;

        2. Related activities that may bring benefits to the service recipient, for example, a reduction in financing costs, as a result of improvement of credit rating of the group; and

          3. Other similar circumstances.

     iv. Service accepted by the service recipient from its related party that has already been compensated for in another related party transaction. Service activities mainly include:

     1. Services related to patent or non-patent technology that have been compensated from the payment of royalty fee;

        2. Loan related services that have been compensated from the payment of interests; and

         3. Other similar circumstances.

      v. Related party services that are not relevant to the functions or risk profile of the service recipient or do not meet the business needs of the service recipient.

      vi. Other related party services that cannot bring direct or indirect economic benefits to the service recipient or that which non-related parties are not willing to purchase or carry out by themselves.

 d. Article 36 sets out the calculation methods for determining the service fee, which are:

     i. Direct method: If the costs of intra-group service can be allocated in accordance with each service recipient and each service rendered, the transaction price shall be determined based on reasonable costs of the corresponding service recipient and service rendered.

      ii. Indirect method: If the costs of intra-group service cannot be allocated in accordance with each service recipient and each service rendered, the transaction price shall be determined based on allocated costs according to the reasonable standard and ratio allocated to each service recipient and service rendered.
BT 201710 LEGAL 025. MAP

Articles 46 to 61 of Announcement 6 (“Articles of Announcement 6”) replace Chapter 11 of Announcement 2 (“Chapter 11”). In comparison with Chapter 11, Articles of Announcement 6 detail the following:

a. Content of mutual agreement

b. Date of application by post or in person

c. Right of SAT for requesting additional documents

d. Internal procedure of Chinese tax authorities when receiving application of an enterprise

e. Obligation of the Chinese tax authority within a specified period for delivering the notice of accepting the application to the enterprise

f. Circumstances that the Chinese tax authority could deny the application of the enterprise or request of the contracting state of double taxation treaty

g. Circumstances that the Chinese tax authority could suspend the MAP

h. Circumstances that the Chinese tax authority could terminate the MAP

i. Obligation of the Chinese tax authority within a specified period for delivering the notice of suspension or termination of MAP to the enterprise

j. Obligation of the Chinese tax authority within a specified period for delivering the notice of entering into the MAP with the contracting state of double taxation treaty to the enterprise

k. Calculation of taxpayable or refund in relation to foreign exchange and interest issues

l. Obligation of confidentiality of the Chinese tax authority for the MAP

m. Right of the tax authority to deal with fraud or other illegal behavior identified during the MAP in accordance with the tax administration law and its implementation rules.

n. Announcement 56, which explains the clauses of double taxation treaties and implementation of MAP, remains in force.

o. It is worth noting that Announcement 2 requires that the enterprise or its related parties must make the application of special tax adjustment within 3 years upon receiving the notice of transfer pricing adjustment. Announcement 6 replaces the 3-year period by referring to the time period as agreed in the taxation.

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