Transfer Pricing in China: 5 Things All Foreign Companies Doing Business in China Should Know

Though in the past transfer pricing was mostly a topic of concern for larger multinationals, as a result of these global developments transfer pricing has also become a topic of increasing interest for small and medium sized enterprises. In practice, however, many SMEs still lack the knowledge and understanding of transfer pricing, and as of our experience we learned that not many companies have sufficient knowledge about this, particularly in a China setting. To help increase the understanding of transfer pricing in China, we have compiled a list of 5 things all foreign companies at least should know about transfer pricing:

Permanent Establishment China

The Permanent Establishment (PE) is frequently used in double taxation avoidance agreements (DTAs). When a PE is constituted, China levies taxes over service fee payments between a foreign company and a local entity.

Structure Your Entity in China

When setting up an entity in China, there are a whole range of crucial decisions that need to be made

Registered Capital in China

It is no longer required to follow a set of specified registered capital limits but it is still important to allocate an ‘appropriate’ amount. Learn more here..

China Trading Company

A trading company is one of the most popular forms of business entities in China for foreign investors, mainly because

Dormant Company in China

There are many reasons why a foreign invested company may decide to suspend their Chinese business activities. This can be

CFO Services in China

Just like the CEO, the role of a CFO is vital to a company’s success. Their expertise in business finance

Trademarking in China

A trademark represents, identifies, and differentiates a brand from others. It protects the image and intellectual property of a business

Joint Venture In China

Want to learn about a China Joint Venture and how it works? We have all the information you need on how to setup a Joint Venture in China, read more here.

10 Steps to Setup Company in China

Foreign companies that wish to do business in China, can set up a foreign invested company to enter the Chinese market. The establishment of a Foreign Invested Entity in China is subject to various laws, regulations and governmental authorities. Therefore, to provide a good understanding of all steps that are required to set up a fully operational entity in China, we provide a 10-step overview below on the corporate establishment procedures.

Compliance in China

A primary objective for foreign companies in China to manage compliance is to maintain control over their Chinese operations and prevent any negative impact which may arise from non-compliance. To achieve this objective, foreign-invested enterprises with Chinese operations should develop a thorough understanding of Chinese legislation. A thorough understanding of Chinese compliance requirements will not only minimize risks but helps to foster trust between consumers and businesses. Particularly in light of China’s ongoing efforts to implement the Corporate Social Credit System, compliance is more important than ever.

A Comparison of China Company Structures

When foreign investors are considering establishing a company in China, deciding on the right market entry vehicle or in other words deciding on the company structure to start operations in China is crucial to understand. The appropriate mode of entry when setting up a legal presence in China depends on multiple parameters, with the intended business activities and industry in China in which a foreign investors wishes to operate being the most important considerations.

Corporate Services