Multinationals should carefully consider the commercial rational for adjusting intra-company pricing arrangements as a result of the Covid-19 pandemic, a Chinese tax official warned Thursday.
Companies that reallocate losses to entities designated as a limited risk distributors are courting trouble with national tax authorities, Yan Xiong, deputy director-general of the international taxation department in China’s State Taxation Administration, told a UN webinar on COVID-19’s impact on transfer pricing. In arm’s length transfer-pricing arrangements, limited risk companies—which take on low-risk activities and assume little or no financial risk—aren’t typically allowed to take on large losses.
- “Concerns may arise when before ...