To manage transfer pricing risks, companies operating in China should assess their related-party transactions and maintain appropriate transfer pricing documentation, including a local file where required. Under China’s transfer pricing documentation requirements, companies that meet the applicable related-party transaction thresholds or other specified conditions may be required to prepare a local file. The applicable requirements should be assessed based on the company’s transactions, functions, risks, and financial results for the relevant year.
POINTDrawing on our practical and analytical experience, we assist clients in preparing transfer pricing documentation in accordance with applicable Chinese requirements. We work with the client’s finance, tax, and business teams to develop the company overview, functional and risk analysis, and benchmarking analysis. We can also help internal teams build the knowledge and processes needed to maintain documentation in future periods.
Through the local file preparation, we hope you can understand the key points of preparing the local file. Preparing a local file generally requires coordination among the relevant entities and internal functions to collect information about related-party transactions, business activities, functions, assets, and risks. Our multilingual team can coordinate with the client’s personnel and other professional advisers in Chinese, English, or Japanese as needed. In case of tax audit, we are prepared to communicate directly with local tax bureau in order to resolve the issues smoothly.
We aim to support clients in maintaining appropriate transfer pricing documentation and managing potential tax risks over the long term.
