Planning of transfer pricing of affiliated enterprises (how to deal with tax audit)

Article 5 1 of the Detailed Rules for the Implementation of the Tax Administration Law stipulates that the so-called affiliated enterprises refer to companies, enterprises and other economic organizations that have one of the following relationships:

(1) There is a direct or indirect ownership or control relationship in capital, operation, purchase and sale, etc.;

(2) It is directly or indirectly owned or controlled by a third party;

(3) There are other interest-related relationships.

Article 36 of the Law on the Administration of Tax Collection also stipulates that the business dealings between enterprises or institutions and places engaged in production and business operations established by foreign enterprises in China and their affiliated enterprises shall be charged or paid according to the business dealings between independent enterprises;

The tax authorities have the right to make reasonable adjustments if the amount of taxable income or income is reduced without collecting or paying the price or expenses according to the business dealings between independent enterprises.

Extended data:

If an independent enterprise completely decoupled from the cosmetics factory is set up for independent accounting, on this premise, it can be sold to an independent enterprise below the market price, thus achieving the purpose of tax saving.

Of course, cosmetics provided by cosmetics factories to independent enterprises cannot be lower than the cost price, but they can be lower than the market price to some extent. In other words, taxpayers must grasp the degree of price fluctuation when using transfer pricing for tax planning. If there is a phenomenon of "obviously low price", the tax authorities have every reason to re-price.

Baidu Encyclopedia-Tax Planning

Baidu Encyclopedia-Detailed Rules for the Implementation of People's Republic of China (PRC) Tax Collection and Management Law