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“Your small arms can’t be that high.”

Intercompany Agreements

2 May 2022

I was sad to hear news this week from Zhengzhou, China, where I have relatives and friends. It has gone into Shanghai-style lockdown. I know that there are many places in the world deserving our sympathy right now, and lockdown isn’t on the same level as war. But I don’t think compassion is a finite resource.

Back in 2019, Xiaofang and I moved to China to set up an office there (to help serve the APAC region). We chose to move to Zhengzhou, the capital of Henan province.

I believe he was commenting on my lack of proper technique for a shoulder press. But unfortunately, unless Xiaofang was with me, he and I could only communicate via the translation function on his phone.

This little story is a trivial example of the challenges of people who speak different languages. In the field of corporate structures for MNEs, transfer pricing professionals often speak a different language from lawyers. They often talk about functions, risks and intangibles, and not contracts, clauses and rights.

This can lead to TP policies with no legal substance, and intercompany agreements which make no sense. That’s one of the reasons why it’s such a fascinating area to work in. It’s also why we as lawyers spend a lot of time educating ourselves about TP, customs, VAT and accounting issues, even though our advice is limited to legal matters.

Whether it's in a commercial setting, in a gym, or anywhere else, finding ways to reach across communication barriers always reaps rewards.

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Article by
Paul Sutton
LCN Legal Co-Founder

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