China: Guidance on cost sharing agreements

China: Guidance on cost sharing agreements

China’s State Administration of Taxation issued guidance concerning cost sharing agreements. The guidance—known in English as “the Announcement on Standardizing the Administration of Cost Sharing Agreement” or Announcement 45 —was issued in June 2015 to improve and standardize the administration of cost sharing agreements.


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Announcement 45 replaces prior guidance (Circular 2) and includes the following measures:

  • To simplify and streamline the administrative procedures, and provide a new rule that agreements are to be submitted to the in-charge tax authorities
  • Add new requirements on filing the related-party transaction disclosure form
  • Emphasize the arm’s length rule and the rule that costs and benefits must be commensurate
  • Replace a previous process of “examination” with enhanced follow-up administration

Read a July 2015 report (PDF 1.31 MB) prepared by the KPMG member firm in China: Standardization of the Administration on Cost Sharing Agreement


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