Meaning
Tax directive issued by the State Taxation Administration outlines the administrative procedures and documentation requirements for mutual agreement procedures under China’s double tax treaties. Multinationals rely on STA public notice 2013 number 56 when seeking to resolve international tax disputes and eliminate double taxation arising from transfer pricing audits. The notice clarifies the process for submitting applications, the timeline for evaluations, and the duties of the tax authorities.
Procedural Protocol
Application procedures require taxpayers to file detailed requests with the provincial tax bureau, which then forwards the documents to the State Taxation Administration. The central tax authority evaluates the eligibility of the case and decides whether to initiate formal discussions with the treaty partner. If accepted, the competent authorities of both states begin negotiations to reach a mutual agreement.
Administrative Scope
Directives in this notice cover the entire lifecycle of a mutual agreement procedure case from the initial filing to the implementation of the final agreement. It specifies the types of cases that qualify for treaty relief, including transfer pricing adjustments and permanent establishment disputes. The guidance ensures that local tax bureaus do not obstruct treaty-based relief through inconsistent regional practices.
Compliance Obligation
Execution guidelines within the notice impose strict deadlines on taxpayers for providing supplementary information requested during the negotiation process. Taxpayers must cooperate fully with the tax authorities and submit updated financial records and transfer pricing studies to support their treaty claims. If the taxpayer fails to provide the required files within the designated timeframe, the tax authorities can terminate the procedure and maintain the original tax assessment.
This procedural rigor means that foreign-invested companies must maintain high-quality documentation to successfully navigate the treaty relief process and avoid unilateral tax adjustments.
