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| Xiao Jie, Administrator of the State Administration of Taxation, Signed a Bilateral APA with the Administrator of The National Tax Service of the Republic of Korea |
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11-12-2009
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Three bilateral advance pricing arrangements (APAs) were signed between China and the Republic of Korea in Seoul on the morning of the November 3, 2009 by Xiao Jie, Administrator of the State Administration of Taxation and Yong-Ho Baek, Administrator of the National Tax Service of the Republic of Korea on behalf of the tax authorities of the two countries during the Fourteenth meeting of the Chinese and Korean taxation administrators. This marks another success in the field of tax negotiation after the first two bilateral APAs were signed on November 17, 2007.
Bilateral APA refers to the agreement reached between the tax authorities of two countries concerning the pricing principles and measures for connected transactions of companies affiliated to transnational corporations. It is commonly applicable for the coming three to five years. With the application of enterprises, the APA can also be applied for solving the transfer pricing issues of previous years.
Along with the economic globalization and the development of the transnational companies, bilateral APA, as a means to solve the transfer pricing problems of transnational companies, is gaining increasing attention from tax authorities and transnational companies of various countries. It has become an effective means to solve international tax disputes and to avoid international double taxation, and it can help provide certainty for business operations of transnational companies, reduce the administration cost of tax authorities, and improve the relations between tax authorities and enterprises as well as fulfill the expectations of tax income.
Both the Chinese and Korean sides attached great importance to this negotiation. After the enterprises filed an application at the end of 2008, the tax authorities of both sides completed the examination, evaluation and two rounds of negotiation and finally signed the arrangement within a year. The efficiency reflects the positive attitude of both sides on the tax negotiation and the friendly, open and cooperative relations between tax authorities of the two nations. |
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