Transfer pricing, broadly speaking, refers to the pricing of goods and services within a multi-divisional organisation, particularly in regard to cross-border transactions. One of the key tricky issues is allocating where the income should be earned and dealing with taxation. Globally, tax authorities increasingly are competing with each other for tax income from these deals.
ôThe New Income Tax Law passed this year by the NPC devotes an entire chapter to transfer pricing, signalling ChinaÆs focus on this matter,ö says Michael Olesnicky, who leads Baker & McKenzieÆs tax practice in Greater China. ôWe feel that ChinaÆs transfer pricing market has evolved to the point where world-class methodologies and water-tight advice are needed to deal with local concerns and with the potential exposure to double taxation.ö
TPMC is headed by Glenn DeSouza, an economist from the United States, who created and lead the transfer pricing practice in China at a big-four firm. DeSouza has been consulted by the State Administration of Taxation (SAT) on such matters as the forthcoming documentation requirement.
Commenting on the alliance, DeSouza says: ôI was the first TP expert in China and have seen our specialty grow but frankly there are still some unmet needs at the top of the market which this alliance will meet.ö
ôThis strategic alliance further expands our æon-the-groundÆ transfer pricing and tax capabilities in China and allows us to provide dedicated service to our clients,ö adds David Fleming, managing partner of Hong Kong, China and Vietnam offices. ôChinaÆs economic development and prominence in international trade has led to a dramatic growth in the integration of global operations by companies and we are pleased to be able to extend our service to our clients in this complex and demanding arena.ö
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