copy the linklink copied!China (People’s Republic of)
The People’s Republic of China (“China”) has met all aspects of the terms of reference (OECD, 2017[3]) (ToR) for the calendar year 2018 (year in review) and no recommendations are made.
In the prior year report, China received one recommendation regarding the timely provision of information on rulings to the Competent Authority for exchange of information (ToR II.5.5). This recommendation has been addressed and is removed.
China can legally issue one type of rulings within the scope of the transparency framework. In practice, China issued rulings within the scope of the transparency framework as follows:
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11 past rulings;
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For the period 1 April 2016 - 31 December 2016: six future rulings;
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For the calendar year 2017: three future rulings, and
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For the year in review: two future rulings.
Peer input was received from one jurisdiction in respect of the exchanges of information on rulings received from China. The input was generally positive, noting that information was complete, in a correct format and received in a timely manner.
copy the linklink copied!Introduction
This peer review covers China’s implementation of the BEPS Action 5 transparency framework for the year 2018. The report has four parts, each relating to a key part of the ToR. Each part is discussed in turn. A summary of recommendations is included at the end of this report.
copy the linklink copied!A. The information gathering process
China can legally issue one type of ruling within the scope of the transparency framework: cross-border unilateral advance pricing agreements (APAs) covering transfer pricing or the application of transfer pricing principles.
Past rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1, I.4.2.2)
There is a legal barrier to the exchange of information on rulings on China, which does not allow the exchange of past rulings. The legal framework in China was amended to allow exchanges on future rulings. As such, the balance of this report relates only to future rulings.
Future rulings (ToR I.4.1.1, I.4.1.2, I.4.2.1)
For China, future rulings are any tax rulings within scope that are issued on or after 1 April 2016.
In the prior year peer review report, it was determined that China’s undertakings to identify future rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. China’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.
Review and supervision (ToR I.4.3)
In the prior year peer review report, it was determined that China’s undertakings to identify future rulings and all potential exchange jurisdictions were sufficient to meet the minimum standard. China’s implementation in this regard remains unchanged, and therefore continues to meet the minimum standard.
copy the linklink copied!B. The exchange of information
Legal basis for spontaneous exchange of information (ToR II.5.1, II.5.2)
China has implemented the necessary domestic legal basis to exchange information spontaneously in place. The legal framework in place does not allow the exchange of past rulings but does allow the exchange of information on future rulings, as from 1 April 2016.1
China is a party to international agreements permitting spontaneous exchange of information, including (i) the Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Amended by the 2010 Protocol (OECD/Council of Europe, 2011) (“the Convention”) and (ii) double tax agreements in force with 100 jurisdictions.2
Completion and exchange of templates (ToR II.5.3, II.5.4, II.5.5, II.5.6, II.5.7)
In the prior year peer review report, it was determined that China’s process for the completion and exchange of templates was sufficient to meet the minimum standard, except for the timely provision of information on rulings to the Competent Authority for exchange of information (ToR II.5.5) which took place on a yearly basis. As noted in the prior year report, China took actions in March 2018 to remedy this issue and reduce the timelines for providing information on future rulings to the Competent Authority. The new information system allows the Chinese tax administration to identify and process information relating to unilateral APAs issued by the local tax administration officers within 10 days after an APA is issued. As such, this recommendation is removed.
For the year in review, the timeliness of exchanges is as follows:
copy the linklink copied!C. Statistics (ToR IV)
The statistics for the year in review are as follows:
copy the linklink copied!D. Matters related to intellectual property regimes (ToR I.4.1.3)
In the prior years’ peer review reports, it was determined that the transparency requirements were not relevant for China’s intellectual property regime (Reduced rate for high & new tech enterprises).
Notes
← 1. Public Notice on Matters Regarding Enhancing the Administration of Advance Pricing Arrangements (SAT Public Notice [2016] No. 64).
← 2. Parties to the Convention are available here: www.oecd.org/tax/exchange-of-tax-information/convention-on-mutual-administrative-assistance-in-tax-matters.htm. China also has bilateral agreements in force with Albania, Algeria, Armenia, Australia, Austria, Azerbaijan, Bahrein, Bangladesh, Barbados, Belarus, Belgium, Bosnia and Herzegovina, Brazil, Brunei Darussalam, Bulgaria, Cambodia, Canada, Chile, Croatia, Cuba, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Iran, Ireland, Israel, Italy, Jamaica, Japan, Kazakhstan, Korea, Kuwait, Kyrgyzstan, Lao People’s Democratic Republic, Latvia, Lithuania, Luxembourg, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, Nepal, Netherlands, New Zealand, Nigeria, North Macedonia, Norway, Oman, Pakistan, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Serbia, Seychelles, Singapore, Slovenia, South Africa, Spain, Sri Lanka, Sudan, Sweden, Switzerland, Syria, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Viet Nam, Zambia and Zimbabwe.
Note by Turkey: The information in this document with reference to “Cyprus” relates to the southern part of the Island. There is no single authority representing both Turkish and Greek Cypriot people on the Island. Turkey recognises the Turkish Republic of Northern Cyprus (TRNC). Until a lasting and equitable solution is found within the context of the United Nations, Turkey shall preserve its position concerning the “Cyprus issue”.
Note by all the European Union Member States of the OECD and the European Union. The Republic of Cyprus is recognised by all members of the United Nations with the exception of Turkey. The information in this document relates to the area under the effective control of the Government of the Republic of Cyprus.
Metadata, Legal and Rights
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