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Sunday, January 14, 2007

China and the US reach first bilateral pre-fixed price agreement

State Administration of Taxation recently announced that China and the US has reached the first bilateral pre-fixed price agreement. The agreement was reached on December 22, 2006 after two rounds of consultations between tax administrations of the two countries in Beijing and Washington, after Wal-Mart officially lodged an application for bilateral pre-fixed price in Jun 2006.Head of State Administration of Taxation Xie Xuren said, "We are very glad to be able to reach the agreement with the US taxation authorities and Wal-Mart."The pre-fixed pricing procedure of State Administration of Taxation provides solutions for possible issues that may result from the investigation of transfer pricing. The procedure facilitates the cooperation between tax payers and China's taxation authorities, and solves possible double taxation disputes that may exist in China's tax law and its relevant taxation accord of income tax. Subscription pricing increases level of certainty of the transfer pricing method of tax payers thus reduces the burden of tax payers' operation.State Administration of Taxation noted that the above mentioned procedure encourages tax payers to proactively provide all the information and date relating to the transfer pricing analysis to China's taxation authorities, and encourages tax payers to reach the agreement based on the principle of openness and cooperation, so as to improve work efficiency of taxation authorities.


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