China: Tax administration’s response to BEPS

China: Tax administration’s response to BEPS

China’s State Administration of Taxation has, in recent weeks, issued guidance that largely clarifies how China plans to apply or “localize” the OECD’s base erosion and profit shifting (BEPS) recommendations. Specifically, a discussion draft on “special tax adjustments” was issued by China’s tax authorities in September 2015, and this draft addresses China’s “localization” of the BEPS actions related to transfer pricing and controlled foreign corporations. With this guidance, it appears increasingly possible to foresee what parts of the BEPS agenda will (or will not) be adopted by China, and if implemented by China, the manner of adoption.

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As the new “post-BEPS” rules take shape, it is also becoming evident as to how multinational enterprises (MNEs) may need to consider revising and adapting their existing investment structures and business models, as well as their tax risk management systems, to cope in the “post-BEPS environment.”

 

Read an October 2015 report [PDF I MB] prepared by the KPMG member firm in China: OECD 2015 BEPS Deliverables Issued and China’s Response

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