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t practices for developing a policy improve the responsiveness and resilience of their
transfer pricing regimes. Internal control systems
There is no fail-safe or risk-free year-end strengthen the daily management and monitoring
adjustment method. Enterprises need to devote of transfer pricing operations, and help to avoid
time and resources into studying local transfer large, unexpected adjustments at the year-end.
pricing rules and practices for their China-based
subsidiaries. This can inform a strong transfer There is no one tried and true method that
pricing policy that helps limit the potential for enterprises can apply to all year-end adjustments.
regulatory risk or costly failure. Enterprises need assess deviations from the arm’s
length principle on a case-by-case basis to choose
A safety first approach makes a big difference. the most suitable method.
Enterprises that ensure pricing terms are in line A strong internal control system for transfer
with the arm’s length principle protect themselves pricing is particularly important given the number
significantly, while transfer pricing policies that of government bureaus that can become involved.
leave extra room for future adjustments also help. Year-end adjustments affect corporate income tax,
custom duties, surcharges, accounting, and foreign
Enterprises should also consider adding more exchange. Enterprises need to ensure that their
explanation notes to relevant clauses of the related policies and practices are in compliance with the
party transaction agreements to help ensure bureaus that oversee these functions.
compliance.
Dezan Shira & Associates assists foreign investors throughout
Enterprises that design and establish an effective Asia and maintains offices in China, Hong Kong, Indonesia,
internal control system for transfer pricing Singapore, Russia, and Vietnam. Please contact info@dezshira.
com or visit our website at www.dezshira.com.
SOUTH CHINA BUSINESS JOURNAL 11
transfer pricing regimes. Internal control systems
There is no fail-safe or risk-free year-end strengthen the daily management and monitoring
adjustment method. Enterprises need to devote of transfer pricing operations, and help to avoid
time and resources into studying local transfer large, unexpected adjustments at the year-end.
pricing rules and practices for their China-based
subsidiaries. This can inform a strong transfer There is no one tried and true method that
pricing policy that helps limit the potential for enterprises can apply to all year-end adjustments.
regulatory risk or costly failure. Enterprises need assess deviations from the arm’s
length principle on a case-by-case basis to choose
A safety first approach makes a big difference. the most suitable method.
Enterprises that ensure pricing terms are in line A strong internal control system for transfer
with the arm’s length principle protect themselves pricing is particularly important given the number
significantly, while transfer pricing policies that of government bureaus that can become involved.
leave extra room for future adjustments also help. Year-end adjustments affect corporate income tax,
custom duties, surcharges, accounting, and foreign
Enterprises should also consider adding more exchange. Enterprises need to ensure that their
explanation notes to relevant clauses of the related policies and practices are in compliance with the
party transaction agreements to help ensure bureaus that oversee these functions.
compliance.
Dezan Shira & Associates assists foreign investors throughout
Enterprises that design and establish an effective Asia and maintains offices in China, Hong Kong, Indonesia,
internal control system for transfer pricing Singapore, Russia, and Vietnam. Please contact info@dezshira.
com or visit our website at www.dezshira.com.
SOUTH CHINA BUSINESS JOURNAL 11
