On 16 April 2014, China Taxation News reported that the Beijing State Tax Bureau made its largest transfer pricing adjustment and collected RMB425 million (US$69 million) in taxes as well as RMB70 million in interest from an electronics manufacturing company based in Beijing, after closing a five-year investigation.
According to the report, the company was mainly engaged in manufacturing electronics products. Between 2003 and 2009, the company sold 93% of its products to its foreign parent company and 7% to its domestic related party. The company’s profit level was very low because its foreign parent company completely controlled the company’s pricing on purchases of raw materials and sales of finished products.
Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com
