Transfer pricing · Local file · Related-party filings

Transfer pricing documentation that survives a tax bureau question

China's related-party filing thresholds are low in practice, and a local file prepared after the tax bureau asks is worth very little. We prepare contemporaneous documentation — the kind you can hand over without a scramble — and we stay on the file if the bureau questions it.

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Thresholds checked first — we tell you whether you actually need a local file before quoting one
Comparables done properly — search, screening and adjustments documented, so the range is defensible
Related-party forms filed with the CIT return — the annual forms are part of the job, not an extra
We defend what we write — if the bureau asks, we answer — that is included, not an add-on

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Brief details

Timing

Deadlines that catch people out

The local file has to exist before it is asked for. That is the whole point of "contemporaneous".

With the CIT settlement — 31 May

The related-party transaction forms are filed with the annual corporate income tax return.

Local file — within 12 months of year end

Prepared and held, ready to be produced on request within the period the rules allow.

Master file — where thresholds are met

Group-level documentation, prepared for the group and held by the China entity.

Country-by-country report — where applicable

Only for groups above the threshold. We tell you whether you are in scope.

Scope of services

What the work actually covers

Written out in detail on purpose. If you are comparing firms, this is the list to put side by side with theirs.

Threshold and risk assessmentWhether you are in scope for a local file, master file or CbC report, and where your real exposure sits.
Related-party transaction mappingGoods, services, royalties, financing and guarantees, mapped with amounts and counterparties.
Functional and risk analysisWho does what, who bears which risk, and who owns which assets — the part that decides the method.
Comparability analysisSearch and screening of comparable companies or transactions, with adjustments documented.
Local file preparationThe full local file in Chinese, with an English version for your group's tax team.
Related-party disclosure formsThe annual forms filed with the corporate income tax return.
Audit defenceResponses to bureau enquiries, and support through any adjustment discussion.

Deliverables

What lands on your desk

Threshold memo

Which filings you owe, and which you do not.

Local file

Chinese version for the authority, English version for the group.

Comparability study

The search, screening and adjustment working, retained as evidence.

Filed related-party forms

Filed with the CIT return, with confirmations retained.

Process

From first email to finished work

01 You send the basics

Entity type, what has been requested, and when it is due. One email is enough to start.

02 Scope and fixed fee

We come back within one business day with a written scope, a fixed fee and dates.

03 Documents and fieldwork

One document request list. We work from it, and visit site only where the work genuinely needs it.

04 Delivery and follow-through

Signed output in English or bilingual, plus support through whatever filing follows.

Fees

How we price it

Fixed, in writing, before fieldwork starts. The drivers below are the ones that actually move the number — we tell you which of them apply to you in the first reply, not after you have signed.

Entity size, number of bank accounts and transaction volume
Whether prior-year figures are audited or management-prepared
Reporting language: English, Chinese, or bilingual
Whether group reporting requires a GAAP reconciliation
How much of the bookkeeping we have to rebuild first

FAQ

Questions about transfer pricing in China

Do we need a local file if our related-party transactions are small?

Possibly not. The thresholds are set by transaction type and amount, and they are lower than most groups expect for service and financing transactions. We check first and tell you honestly if you are out of scope.

What triggers a transfer pricing audit?

Routinely: sustained losses with related-party revenue, large service fees or royalties paid overseas, thin capitalisation, and related-party transactions with an entity in a low-tax jurisdiction. Filing a credible local file reduces the chance of being selected, and shortens the process if you are.

Can you defend the file if the tax bureau questions it?

Yes, and it is included in the fee. Documentation written by someone who will not be there when the questions arrive tends to be written differently.

Is the report available in English?

The filing itself is in Chinese because that is what the authority requires. You get an English version alongside it, so your group tax team is not reading a summary.

What does it cost?

It depends mainly on how many related-party transaction types there are and whether a comparability study is needed. Tell us the transactions and we will quote in writing.