It is an important link for foreign-funded enterprises to deal with related party transactions in China, which involves transfer pricing and other provisions. The following are the main steps and matters needing attention:

Determining the relationship:

First, we need to make clear what the relationship is. Usually, direct or indirect equity, management or business relationship may constitute an association relationship.

Follow the "independent transaction principle":

The price of related party transactions should be consistent with the price under independent transactions to ensure that the transactions are fair.

File filing:

Enterprises need to prepare and keep relevant documents and materials for their related transactions to prove that their transaction prices are fair.

annual report on related party transactions:

every year, enterprises need to submit an annual report on related party transactions, listing all transactions with related parties in detail.

Selection of transfer pricing method:

Select appropriate transfer pricing methods, such as uncontrolled price method and resale price method, to determine the price of related party transactions.

risk assessment:

regularly assess the tax risks of related party transactions to ensure the tax compliance of enterprises.

Dealing with tax investigation:

If the tax authorities investigate the related transactions of enterprises, enterprises should cooperate to provide relevant documents and materials.

adjustment and correction:

if the price of related party transactions is found to be inconsistent with the market price, it should be adjusted in time and the tax should be paid back or refunded according to the regulations.

in short, dealing with the tax problems of related party transactions requires enterprises to strictly abide by relevant laws and regulations to ensure the fairness and transparency of transactions. I hope this information can help you.