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Special tax investigation adjusts 12 major changes in the new regulation.
Recently, the State Administration of Taxation promulgated the Measures for the Management of Procedures for Special Tax Investigation and Adjustment and Mutual Consultation (No. 6, 2017, hereinafter referred to as the "Measures"). The Measures were issued by the State Administration of Taxation in succession to the "Notice on Improving Related Declaration and Matters Related to the Management of Mean Data" (State Taxation) Notice No. 42 of the General Administration of Taxation, No. 64 of the State Administration of Taxation, No. 64 of the State Administration of Taxation, No. 64 of the State Administration of Taxation, No. 42 of 2016, and the Notice on Improving the Management of Advanced Price Arrangements were issued again after the announcement. The measures for the Implementation of Special Tax Adjustment (for Trial Implementation) (State Tax Issuance [2009], No. 2, were adopted. Hereinafter referred to as No. 2) the relevant content is revised and perfected. On the basis of No. 2 and its supporting documents, the Measures incorporate the new requirements of BEPS action plan, and form the systematic integration of new transfer pricing regulations under the background of BEPS. Compared with No. 2 and its supporting documents, there are twelve major changes in the Measures, which enterprises should pay attention to and better meet the new tax challenges.
Change 1: encourage taxpayers to adjust their own taxes.
The Measures quote the relevant provisions of the Notice of the State Administration of Taxation on Issues Relating to the Supervision and Management of Special Tax Adjustment (the Notice No. 54 of the State Administration of Taxation in 2014, hereinafter referred to as Notice No. 54), introduce the idea of risk management into special tax adjustment, and encourage taxpayers to adjust their own tax payment.
At the same time, the requirement of "taxpayers shall provide the same period information or other relevant information within 20 days in accordance with the relevant provisions" in Article 1 of Notice No. 54 has been cancelled, which reduces the burden that taxpayers must provide the same period information or other relevant information to different special tax adjustment risks.
The Measures also clarify that when self-adjusting and paying taxes, the special tax payment adjustment and self-paying tax payment form should be filled out, which solves the specific declaration procedure problem of self-adjusting and paying taxes in bulletin 54.
Change 2: expand the scope of investigation and adjustment.
The scope of the special tax investigation and adjustment in the Measures is no longer limited to the "transfer pricing investigation and adjustment" in Article 2, but covers all the "special tax adjustment" covered by Chapter 6 and 2 of the Enterprise Income Tax Law and its Implementation Regulations, that is, after the implementation of the Measures on May 1, 2017, the special tax investigation procedures will be implemented. It is suitable for special tax investigation and adjustment of transfer pricing, cost sharing agreement, controlled foreign enterprises, capital weakening, general anti-tax avoidance and so on.
In addition, Article 76 of Article 2 of the Measures places the content of "not distributing or reducing the distribution of profits due to reasonable business needs" in the focus of attention, which indicates that whether the controlled foreign enterprises distribute profits or not will be included in the special tax investigation and adjustment management; and "implementing other unreasonable business purposes" "Tax planning or arrangement" included in the risk of the focus of attention, the essence of the general anti-tax avoidance provisions in Article 2 covered by the "other arrangements without reasonable commercial purposes" translated into the "Measures".
Change 3: changes in special tax investigation procedures
Article 5 of the Measures stipulates that the Notice of Tax Inspection (1) shall only be served to the enterprises under investigation for special tax adjustment filing. Article 32 of Article 2 stipulates that when the tax authorities conduct on-the-spot investigations on the identified objects, the investigators shall produce the Tax Inspection Certificate and serve it to the Notice of Tax Inspection.
Change 1: encourage taxpayers to adjust their own taxes.
The Measures quote the relevant provisions of the Notice of the State Administration of Taxation on Issues Relating to the Supervision and Management of Special Tax Adjustment (the Notice No. 54 of the State Administration of Taxation in 2014, hereinafter referred to as Notice No. 54), introduce the idea of risk management into special tax adjustment, and encourage taxpayers to adjust their own tax payment.
At the same time, the requirement of "taxpayers shall provide the same period information or other relevant information within 20 days in accordance with the relevant provisions" in Article 1 of Notice No. 54 has been cancelled, which reduces the burden that taxpayers must provide the same period information or other relevant information to different special tax adjustment risks.
The Measures also clarify that when self-adjusting and paying taxes, the special tax payment adjustment and self-paying tax payment form should be filled out, which solves the specific declaration procedure problem of self-adjusting and paying taxes in bulletin 54.
Change 2: expand the scope of investigation and adjustment.
The scope of the special tax investigation and adjustment in the Measures is no longer limited to the "transfer pricing investigation and adjustment" in Article 2, but covers all the "special tax adjustment" covered by Chapter 6 and 2 of the Enterprise Income Tax Law and its Implementation Regulations, that is, after the implementation of the Measures on May 1, 2017, the special tax investigation procedures will be implemented. It is suitable for special tax investigation and adjustment of transfer pricing, cost sharing agreement, controlled foreign enterprises, capital weakening, general anti-tax avoidance and so on.
In addition, Article 76 of Article 2 of the Measures places the content of "not distributing or reducing the distribution of profits due to reasonable business needs" in the focus of attention, which indicates that whether the controlled foreign enterprises distribute profits or not will be included in the special tax investigation and adjustment management; and "implementing other unreasonable business purposes" "Tax planning or arrangement" included in the risk of the focus of attention, the essence of the general anti-tax avoidance provisions in Article 2 covered by the "other arrangements without reasonable commercial purposes" translated into the "Measures".
Change 3: changes in special tax investigation procedures
Article 5 of the Measures stipulates that the Notice of Tax Inspection (1) shall only be served to the enterprises under investigation for special tax adjustment filing. Article 32 of Article 2 stipulates that when the tax authorities conduct on-the-spot investigations on the identified objects, the investigators shall produce the Tax Inspection Certificate and serve it to the Notice of Tax Inspection.
For the taxpayer to provide information and tax authorities to obtain evidence, the "measures" have made specific provisions. There are many new provisions, such as "electronic data to prove the facts of the case," for the first time clear the tax authorities can take evidence.
Change 4: improved comparability analysis
The Measures follow the comparability analysis in Article 22 of No. 2 and are revised and perfected with reference to the OECD Transfer Pricing Guidelines and Notice 42.
1. Article 15 The "financial asset" is added to the transaction assets or service characteristics, which matches the "financial asset" added to the related party transaction type in Notice 42.
2. For the analysis of the "contract terms", the "contract terms analysis should pay attention to the ability and behavior of the enterprise to execute the contract, and the credibility of the contract terms signed between the related parties" are added.
3. Article 15 The analysis of the economic environment puts forward the analysis of the "special geographical factors such as cost savings and market premium" which the Chinese tax authorities have consistently adhered to. The analysis of "geographical special factors" has become an indispensable part of the "local documents" of the same period of bulletin 42.
On the basis of the comparative analysis, evaluation and selection of the surveyed enterprises, the following requirements are required:
1. On the basis of analyzing and evaluating the functional risks of the parties involved in the transaction, the party with relatively simple functions should be selected as the subject to be tested.
2. Public and non-public information can be used in comparability analysis, but the principle of giving priority to public information is emphasized.
3. When analyzing and evaluating whether the affiliated transactions of the enterprises under investigation conform to the principle of independent transactions, the tax authorities explicitly put forward the "annual or yearly calculation of the average profit or price of comparable enterprises", which is more than the quartile method in choosing comparable profits or comparable prices in accordance with the principle of independent transactions.
Change 5: improved transfer pricing method
The measures quoted the various transfer pricing methods as specified in Article 2, and revised and improved them.
1. Comparable to the non-controlled price law, the Measures have maintained the same terminology as the types of transactions specified in Notice 42.
2. the re sale price law basically translates 2 article.
3. the cost plus method preserves all the contents of cost plus method in document 2.
4. Transaction Net Profit Law, the Measures have many new contents, but also the whole transfer pricing method part of the biggest change;
5. Profit partitioning method puts forward that "when it is difficult to obtain comparable transaction information but can reasonably determine the consolidated profit, we can consider the factors such as income, cost, cost, assets, and the number of employees related to value contribution, analyze the contribution of each party to value, and distribute the profit among all parties. ";
6. The other methods that accord with the principle of independent transaction are put forward, including cost method, market method and income method.
Change 6: strengthen monitoring of loss of single function Enterprise
On the basis of integrating Article 39 of Article 2 and Notice of the State Administration of Taxation on Strengthening the Supervision and Investigation of Cross-border Affiliated Transactions (State Tax Letter [2009] 363), the Measures make it clear that enterprises engage in single production business such as incoming material processing or incoming material processing for foreign affiliated parties, or engage in distribution and contract R&D business. In principle, a reasonable level of profits should be maintained.
In case of losses, such enterprises shall prepare local documents for the same period of loss year, whether or not they meet the data preparation standard of the same period in Notice No. 42. The tax authorities should focus on auditing the local documents of these enterprises and strengthen monitoring and management.
Change 7: value contribution and income distribution of intangible assets
As for the value contribution of intangible assets, the Measures draw on the revision of Chapter VI of the BEPS8-10 Action Plan's Guidelines on the Pricing of Intangible Assets for Transfer.
For the royalties collected or paid by enterprises and their affiliated parties for the transfer or transfer of the right to use intangible assets, the analytical framework is embedded in the announcement of the State Administration of Taxation on the issue of enterprise income tax related to the payment of fees by enterprises to affiliated parties abroad (No. 16, 2015, hereinafter referred to as No. 16, announced by the State Administration of Taxation). Notice) the spirit of paying royalties to overseas related parties.
Notice No. 16 has adopted a principled description of "non-deductible" in the payment of royalties, while the Measures have standardized the adjustment mechanism for the collection or payment of royalties by way of enumeration, providing a legal basis for the specific operation of tax authorities.
Change 8: emphasize related services transfer pricing compliance
Articles 35 and 36 of the Measures reflect the revision of the BEPS8-10 Action Plan: Labor Services in Low Value-Added Groups to Chapter VII of the Transfer Pricing Guidelines: "From the perspective of transfer pricing, to explore the existence and certainty of activities to determine whether members of a multinational enterprise group and other members of the group provide services." Whether the price of these services is in line with the principle of independent transaction. That is, related services mainly involve two aspects:
1. whether to provide related labor services, it is necessary to formulate rules for determining or deciding.
2. identify factors that need to be considered when using independent trading pricing principles.
Change 9: implementation of special tax adjustment is more cautious
Article 40 of the Measures invokes the procedural provisions of Article 43 of Article 2 concerning tax adjustment for transfer pricing by tax authorities. However, compared with the provisions of Article 2, the procedural provisions for the implementation of special tax adjustment in the Measures are more cautious and clear in terms of both the general formulation and the operation of specific procedures. In terms of its procedural provisions, almost all the fortieth sections of the measures have been adjusted or supplemented.
Change 10: clear the situation of additional late fees.
Article 44 of the Measures clarifies the situation of the imposition of late fees: the dispute between the leviers and the leviers in actual operation is settled by "overdue payment of the unpaid tax within the time limit set out in the Notice of Adjustment of Special Tax Investigation".
For the change of self-adjusting tax subsidy, announcement No. 54 directly expressly increases the interest rate according to the benchmark interest rate, while Article 45 of the Measures, on the basis of announcement No. 54, adds "and provides the same period information on its own initiative or other relevant information as required by the tax authorities", so as to increase the interest rate according to the benchmark interest rate.
Change 11: clear the contents of mutual consultation procedure.
The procedures of mutual consultation clearly covered in the Measures include the negotiation and signing of bilateral or multilateral pre-agreed pricing arrangements, and the negotiation and negotiation between the contracting parties to a tax agreement on the implementation of special tax investigation and adjustment, which caused the other party to adjust accordingly.
The Measures specify the specific circumstances in which the tax authorities may refuse, suspend or terminate the procedures for mutual consultation, and clarify the specific working procedures for serving the results of bilateral consultation, reimbursing taxes, etc.
Change 12: increase or decrease the special tax investigation adjustment form.
Compared with Article 2, the main changes in the main contents of the special tax investigation and adjustment form in the Measures include:
1. The new "Special Tax Adjustment Self-Payment Tax Payment Form", "Application Form for Starting Mutual Negotiation Procedure for Special Tax Adjustment" and "Notice of Supplementary (Return) Tax by Mutual Negotiation Agreement for Special Tax Adjustment" have been added.
2. Retain the "affiliated relationship confirmation form", "affiliated transaction confirmation form", "notification of conclusion of special tax investigation", "record of consultation content", "notice of preliminary adjustment of special tax investigation" (including enterprise income tax adjustment items table, other tax adjustment items table, detailed list of various tax receivables (refunds), "special tax investigation" The notice of adjustment is only a change in the name of the table, the format or the legal basis of the reference.
3. Cancel the Enterprise Functional Risk Analysis Form, the Enterprise Comparable Factor Analysis Form and the Enterprise Comparable Factor Analysis Recognition Form.
4. translates the "financial analysis table of enterprise related transactions" to 22 related declaration forms.