China tax newsletters
Mazars’ comments on tax issues in the People’s Republic of China.
February 2021 - OECD Guidance on transfer pricing implications of COVID-19
On 18 December 2020, the OECD published Guidance on the transfer pricing implications of the COVID-19 pandemic (“OECD Guidance”) providing guidance to taxpayers when applying the arm’s length principle and applying the OECD 2017 Transfer Pricing Guidelines (“TPG”) for periods impacted by the COVID-19 pandemic.
The OECD Guidance is divided into four sections to highlight challenges that multinational enterprises (“MNE”) may encounter in complying with transfer pricing regulations as a result of COVID-19. COVID-19 may also trigger the need for intragroup debt. This OECD Guidance however does not deal with the transfer pricing of financial transactions, which was covered by another guidance issued by the OECD in February, 2020. Please refer to our Tax Commentaries issued in September and October 2020.
The OECD Guidance includes the following four sections:
1. Comparability analysis;
2. Losses and the allocation of COVID-19 specific costs;
3. Government assistance programs; and
4. Advance pricing agreements.
Download our Hong Kong tax newsletter to learn more.
The OECD Guidance is divided into four sections to highlight challenges that multinational enterprises (“MNE”) may encounter in complying with transfer pricing regulations as a result of COVID-19. COVID-19 may also trigger the need for intragroup debt. This OECD Guidance however does not deal with the transfer pricing of financial transactions, which was covered by another guidance issued by the OECD in February, 2020. Please refer to our Tax Commentaries issued in September and October 2020.
The OECD Guidance includes the following four sections:
1. Comparability analysis;
2. Losses and the allocation of COVID-19 specific costs;
3. Government assistance programs; and
4. Advance pricing agreements.
Download our Hong Kong tax newsletter to learn more.
January 2021 - Changes are around the corner: the BEPS 2.0 Pillar 1 update
In October 2019, the OECD released proposals for a new unified approach to taxation of multinational enterprises in the digital environment, the so-called Pillar 1 of the BEPS 2.0 project. In November 2019, the OECD also released the Global Anti-base Erosion (GloBE) proposal, the so-called Pillar 2 of the BEPS 2.0 project. On 12 October 2020, the G20/OECD Inclusive Framework on BEPS (“Inclusive Framework”) released two detailed “blueprints” in relation to its ongoing work to address the tax challenges arising from the digitalization of the economy (“Pillar 1”) and in relation to the tax rules designed to ensure that large multinational businesses pay a minimum level of tax on all profits in all jurisdictions (“Pillar 2”).
The OECD’s aim is to bring the process to a conclusion by mid-2021.
This tax newsletter comments on the Pillar 1 initiation, and we would comment on the Pillar 2 in a separate tax newsletter.
For more information, please download our newsletter to read more.
The OECD’s aim is to bring the process to a conclusion by mid-2021.
This tax newsletter comments on the Pillar 1 initiation, and we would comment on the Pillar 2 in a separate tax newsletter.
For more information, please download our newsletter to read more.
September 2020 - China addresses permanent establishment and residency issues due to COVID-19
The COVID-19 pandemic has significantly impacted the normal operation of multinational enterprises to different extents. The OECD had issued an analysis called “OECD Secretariat Analysis of Tax Treaties and the Impact of the COVID-19 Crisis” on 3 April 2020. Mazars analyzed the OECD Analysis on its China Tax Newsletter in April 2020.
April 2020 - OECD secretariat analysis of tax treaties and the impact of the COVID-19 crisis
The COVID-19 pandemic has forced governments to take unprecedented measures such as restricting travel and implementing strict quarantine requirements. As a result of these restrictions, many cross-border workers are unable to physically perform their duties in their country of employment. These employees would have to stay at their home country and work through telework, and could even be laid off because of the non-performance of duties.
April 2020-Transfer pricing in the wake of COVID-19 and the recent China-US trade dispute
Multinational enterprises (MNEs) which source their products manufactured in China or sell to the China market will be adversely affected by the coronavirus disease 2019 (COVID-19) and the recent China-US Trade Dispute during 2019. In addition to a declining global economy because of the above un-fortunate factors, these MNEs will face disruptions to their supply chains and challenges of moving personnel cross borders, which will likely lead to an erosion of profit margins.
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