Transfer pricing in China

Transfer pricing in China at a glance

Regulation Type OECD
Are there specific transfer pricing regulations? Yes
Submission deadline Before May 31 following calendar year
Submission deadline upon request 20
Annual update required Yes
Official language requirements Chinese
Potential impact of penalties RMB 2,000 – RMB 10,000 for failure to disclose and forms and RMB 10,000 – RMB 50,000 for refusing to provided contemporaneous documentation


Chinese tax law

Rules for transfer pricing in China are based upon:

  • China Corporate Income Tax Law (CITL), Chapter 6, Articles 41 to 48
  • CITL Implementation Regulations, Articles 109–123
  • Guoshuifa (2008) No. 114, (Guoshuifa 114) — Notice Containing Related Party Transaction Annual Reporting Forms
  • Guoshuifa (2009) No. 2, (Guoshuifa 2) — Implementation Measures for Special Tax Adjustments
  • Caishui (2008) No. 121, (Caishui 121) — Notice on the Tax Deductibility of Interest Expense Paid to Related Parties
  • Guoshuihan (2009) No. 363, (Guoshuihan 363) — Notice on the Strengthening, the Monitoring and Investigation of Cross-border Related Party Transactions [for Single Function Entities]
  • Guoshuihan (2009) No. 188, (Guoshuihan 188) — Notice on Intensifying the Transfer Pricing Follow-up Administration
  • Guoshuihan (2010) No. 323, (Guoshuihan 323) — Notice on Guidance Given by SAT to Tax Bureaus with respect to Contemporaneous Documentation Reviews
  • Guoshuihan (2011) No. 167, (Guoshuihan 167) — The Annual Anti-tax Avoidance Work Report (reports the 2010 anti-tax avoidance enforcement work conducted by SAT and the 2011 work plan)
  • Guoshuifa (2012) No. 13, (Guoshuifa 13) — Regulation for Internal Procedures of Special Tax Adjustments (Trial Implementation)
  • Panel Review Rules for Significant Special Tax Adjustment Cases (Trial) (Guo Shui Fa [2012] No. 16);
  • Guoshuihan (2011) No. 111, (Guoshuihan 111) — 2011 Annual Anti-tax Avoidance Work Report


The State Administration of Taxation (SAT) does, in principle, recognize the OECD transfer pricing guidelines (TPG) including the transfer pricing methods described in the OECD TPG.


Accepted methods are:

  • the comparable uncontrolled price method
  • the resale price method
  • the cost plus method
  • the profit split method
  • the transactional net margin method
  • other methods in accordance with article 111 of the EIT law and article 23-27 of the Circular of the SAT on the issuance of the Implementation Measures for Special Tax Adjustments (GuoShuiFa, 2009, No. 2.)

The SAT will accept a reasonable method that follows the arm’s length principle, so there is no priority of methods.

Documentation requirements

Information that should be part of the contemporaneous documentation:

  • Organizational structure
  • Information on business operations
  • Information on related party transactions
  • Comparability analysis
  • Selection and application of transfer pricing methods


All documentation should be prepared in the Chinese language.

Preparation deadline

Article 16 of Guoshuifa 2 specifies that taxpayers should finish the preparation of contemporaneous documentation on or before 31 May of the following calendar year (i.e. the filing date of the Corporate Income Tax Return).

Deadline to submit

Transfer pricing documentation should be submitted to tax authorities within 20 days of a request.

Advance Pricing Agreements


Advance Pricing Agreements (APA’s) are available in China. Unilateral, bilateral and multilateral APAs with rollback features are available. Guidance regarding the APA process and procedures is provided in Articles 46 through 63 of Guoshuifa 2.

There is no fee applicable for filing an APA request. The APA process includes, in general, six phases;

  • Pre-filing meeting;
  • Formal application;
  • Review and evaluation;
  • Negotiations;
  • Signing of the agreement, and
  • Monitoring and execution.


The duration of an APA is generally between three and five years.


Penalties apply for failure to file the related-party transaction disclosure forms (RMB 2,000 — RMB 10,000), for refusing to provide contemporaneous documentation and other information on related-party transactions, or providing incorrect or incomplete information (RMB 10,000 — RMB 50,000).

Transfer pricing adjustments are subject to interest (based on the RMB benchmark lending rate published by the People’s Bank of China) plus penalty interest of 5 percent if the taxpayer has not complied with the contemporaneous documentation requirements.