Japanese enterprise A in Guangdong Province mainly engages in the production and sales of household appliances, and has constantly been at the status of loss or meager profit. In 2015, the State tax bureau visited enterprise A together with the in-charge tax authority and questioned the transfer pricing policies. Enterprise A entrusted us to make response.
• Based on the information and financial data provided by enterprise A, we collect and analyze the financial statements and the purchase and sales price documents of related enterprises, probe into the transfer pricing risks associated with enterprise A;
• Based on the analysis above, according to the past experience of our team in tax authorities investigation response, we summarized possible methods to deal with transfer pricing investigation, did related tax calculations, and analyzed the future impact of related investigation on enterprise A;
• We analyzed the profitability of enterprise A from 2011 to 2015 and the special factors affecting the profitability, prepared the explanation plan to the tax authority, and drafted the explanation letter to be submitted to the tax authority.
• We assisted enterprise A to negotiate with the tax authority, to answer questions indicated by the tax authorities, and to try for the optimum treatment plan for the enterprise.
In the case above, we immediately began to response after entrusted by enterprise A. The in-charge tax authority confirmed related matters after received the explanation letter prepared by our team, and finally agreed with the reasonability of related transaction pricing. There is no need for enterprise A to make any adjustment to the current transfer pricing policy.