TP in Shanghai – too hot to handle?

I’m holding the fort here at Chateau Sutton this week, while my boss / wife / LCN co-founder Xiaofang is on a business trip to Shanghai. Being the hard worker that she is, her first three meetings were on Sunday. They included one with a local tax inspector who deals, inter alia, with the China subsidiaries of multinational corporations.

China may have a reputation as a ‘difficult’ tax jurisdiction for foreign companies. But from a local perspective, at least, that’s not the case. The administrative set-up has the effect of encouraging local inspectors to reach an agreed position on transfer pricing issues, and avoid a dispute which would have to be referred up to the central administration. My guess is that, as in most countries, cultivating a positive relationship with tax inspectors is at least as important as having compliant documentation and intercompany agreements.

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