Meaning
A joint administrative scheme established by Chinese taxation and customs authorities allows qualified importers to seek concurrent approval for their transfer pricing methodologies. Under announcement 2021 number 62, the General Administration of Customs and the State Taxation Administration cooperate to evaluate related party transactions. This mechanism reduces the risk of double taxation where customs demands a higher valuation for duty purposes and tax authorities demand a lower price to prevent tax avoidance.
The policy applies to enterprises that meet specific asset and transaction thresholds and are willing to engage in a highly transparent disclosure process.
Synergistic Application
Eligibility criteria for this program prioritize multinational enterprises with stable long-term operations in China. When a company applies under announcement 2021 number 62, it submits a single application to both the regional tax bureau and the local customs district. This cooperative assessment represents a major departure from the historical practice where each agency acted independently without sharing valuation data.
It provides a formal framework where tax and customs officials hold joint sessions to agree on an acceptable arm’s length price range.
Operational Flow
The administrative process begins with a preliminary consultation where the applicant presents its transfer pricing methodology and global value chain allocation. If both the tax and customs authorities accept the proposal, a formal evaluation period follows, during which officials review corporate contracts, transaction records, and industry benchmarks. Under announcement 2021 number 62, the authorities complete their assessment and issue a joint consensus letter within a specified timeframe.
This document binds both departments to the agreed transfer pricing method for a period of up to three years, shielding the importer from unilateral adjustments by either agency. Importers must still file annual reporting documents to prove their ongoing compliance with the agreed terms.
Strategic Benefit
Securing a joint agreement offers substantial administrative certainty to multinational firms operating in the Chinese market. It effectively eliminates the exposure to conflicting tax adjustments that arise from the opposing mandates of the two revenue collection authorities. While the application requires intensive preparation, the long-term saving in audit defence costs is substantial.
This dual-agency alignment remains one of the most advanced compliance mechanisms available to foreign-invested companies.
