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2016 witnessed key developments in China tax policy and enforcement practice. Notable among these were the completion of the 2012-2016 VAT reform, the rollout of new international tax and transfer pricing rules in the wake of the 2013-2015 G20/OECD Base Erosion and Profit Shifting (BEPS) project, and initial steps taken by China to roll out the new global system for automatic exchange of tax information, embodied in the OECD Common Reporting Standard (CRS). Keeping up with all of the latest developments is challenging, and the KPMG China Annual Tax Update offers a unique opportunity to better understand the evolving China tax landscape and get insights on anticipated tax developments into 2017.
Landmark tax developments in 2016:
· Transfer Pricing
It has been a monumental year for transfer pricing with the release of the revised regulations on transfer pricing compliance and advance pricing applications, and the imminent introduction of the highly anticipated revised regulation on transfer pricing investigations. We will take you along this journey to consider how these changes will impact you in the post-BEPS world in which controversy will likely become the norm for many years to come.
· International Tax and BEPS
In 2016 China played a key role in driving forward the roll out of the G20/OECD BEPS reforms, as host of the G20 and the OECD Forum on Tax Administration. China made its own international tax framework increasingly robust, with updates to the China treaty network, measures to put in place automatic exchange of tax information (OECD Common Reporting Standard (CRS)) with other countries, as well as rigorous enforcement of treaty abuse and permanent establishment (PE) rules. This session will set out how businesses may need to revise structures, business protocols, and documentation to ensure that tax positions are supportable going forward.
· M&A Tax and Restructuring
Following the rollout of a number of new M&A related tax rules in 2015, for internal group restructurings, tax treaty relief, and offshore indirect transfers, enforcement practices have continued to evolve in 2016. We will share insights on the application of these M&A rules in practice, from the perspectives of both the PRC tax authorities and the marketplace, and on how tax risks may be mitigated.
· Value Added Tax
With the VAT reforms having been implemented recently for a number of important sectors, and with the tax authorities taking a strong stance in enforcing compliance with the new VAT rules, we take a look at the key risks being faced by business, the areas of uncertainty which exist, and ways in which businesses can manage those risks and uncertainties.
· R&D Tax Incentives
Following updates to the regulations regarding the 150% Super Deduction and High and New Technology Enterprise (HNTE) status, we will clarify how companies can identify benefits and manage risks associated with both programs, and offer specific insights resulting from case experience and KPMG discussions with government officials.
· Customs
We will brief you on the main China Customs policy changes in 2016. Key developments include the release of the new Customs Audit Regulations, which will significantly improve Customs administration; the release of Announcement No.20, which creates new customs challenges for cross-border royalties and payments to related parties; as well as measures to standardize the taxation of cross-border E-commerce business.
· Tax Administration and Tax Risk Management
BEPS implementation, the SAT Thousand Enterprise Initiative, and the forthcoming CRS reporting impose ever greater tax information disclosure and tax risk management demands on tax teams, meaning that technology solutions are becoming ever more critical to effective tax risk control. We will outline the major China issues and detail how our newly developed Total Tax Solution, a tax management software, can help taxpayers better manage tax risk and increase tax work efficiency.
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