ey-global-tax-policy-outlook-for-2015

China
•
• Transfer pricing changes
• A nationwide investigation on substantial outbound
•
payments of service fees (including management fees)
and royalty payments to overseas related parties has been
launched by the SAT pursuant to Circular Shuizhongbanfa
• SAT’s letter submitted to the United Nations
• Financial and real estate industries are expected to be
• The SAT submitted its views on service fees and
covered under the VAT reform. The VAT burden will
management fees to the United Nations in February
depend on the tax rate and the transitional measures yet
2014. The letter states the SAT’s views on the
to be announced.
application of the arm’s-length principle for intra-group
• Controlled foreign companies
regarding intra-group services in China based on
practical experience from transfer pricing investigations.
•
•
38 to impose further reporting requirements for Chinese
controlled foreign corporations. Effective 1 September
2014, information of overseas investment where the
Chinese entity has over 10% shareholding or de facto
•
control must be reported, including shareholding and
for equipment acquired by enterprises and used for
directorship and related-party transactions. 11
75 (Circular 75). 12
• Thin capitalization
equipment with a unit value of no more than RMB1 million
2014 is fully deductible in the year of acquisition for
CIT purposes. Items with a unit price in excess of RMB1
either accelerated depreciation, i.e., 60% of its regular
depreciation life, or a double-declining-balance method.
11
12 Ibid.
60 | The outlook for global tax policy in 2015