The statistics analyze the anticipated pricing agreements signed by year, by type of transaction, region, sector, closing time and transfer pricing method chosen. This change in trend responds to a request made in the 2018 report, which calls on companies to provide tax authorities, during the review and assessment period, with more information facilitating the use of the profit-sharing method or the resale price method for ex ante price agreements. Transfer pricing methods used in ASAs: We find in the report that in 2019, five of the newly signed ASAs adopted the profit allocation method corresponding to the total number of ASAs using the same method between 2005 and 2018. It shows that Chinese tax authorities are actively attempting and succeeding in applying the profit-sharing method during the APA negotiation process, especially when both parties to transactions make a significant contribution to value creation or cases with site-specific benefits („LSA“). Looking ahead, uncertainty in the global economy, due to disruptions caused by the coronavirus (COVID-19) pandemic and challenges posed by certain trade policies, is seen as an opportunity for governments around the world to increasingly compete with tax revenues. Faced with these uncertainties, taxpayers are looking for an environment that offers a fair and secure tax administration to facilitate cross-border investments. In this regard, the Chinese tax authorities are seen as continuing their efforts to improve the business environment and promote the free flow of trade and investment in China, as evidenced by efforts to constantly advance the ABS program to reassure taxpayers and avoid and avoid double taxation. The report also shows that a unilateral ABS typically lasts two years, while a bilateral agreement can last more than three years. It should be noted that this period relates to the filing date of the formal application up to the closing date, given the preparation and communication with the local tax authorities before filing, which means that the actual cost of time for applicants is much greater. According to the 2015 report, the SAT concluded a total of 125 APAs (76 unilateral and 49 bilateral) between 2005 and 2015, for an average signature of 10 to 13 unilateral and bilateral APAs per year. Figure 1 shows a very limited increase in the number of ASAs closed each year over the decade. The SAT has provided extensive transfer pricing (TP) and ABS training to tax officials at the provincial and local levels and in 2015 established a third anti-tax evasion department.
These measures will help to increase the number of ABS applications processed by the SAA in the future, but the gap is not expected to be closed in the near future.. . .