What changes the answer
The signal ledger.
These facts move the question beyond a label and into a product, money-flow and control analysis.
Signal
Ask the operating question
Why it changes the route
Related-party relationship
Are entities related under ownership/control/statutory tests?
This determines whether TP rules apply.
Transaction type/value
Which goods, services, financing, royalties or other dealings occur and at what value?
Type/thresholds drive documentation.
Functions/assets/risks
Which entity performs key functions, owns assets and controls significant risks?
Pricing should reflect the actual functional profile.
Pricing method
Which method best fits the transaction and comparables?
A mismatched method weakens support.
Documentation threshold
Do current rules require local/master/special files?
This determines evidence and timing.
Prepare before you escalate
Bring a compact evidence docket—not a pitch deck.
Give a compliance team or counsel the operating facts that reveal the perimeter.
01related-party scheduleEstablish the specific facts and legal significance of related-party schedule for this route.
02intercompany agreementsConfirm the parties, rights, obligations and operative legal basis.
03functional analysisDocument which entity performs functions, uses assets and controls risks.
04benchmark/pricing supportSupport the selected pricing method and arm’s-length result.
05annual forms/documentationEstablish the specific facts and legal significance of annual forms/documentation for this route.
Questions people ask before they build.
Short answers for orientation. The right result can change with the service model and current rules.
Is a simple cost-plus always safe?
No. The method must fit the functions and risks. Cost-plus can be wrong for unique intangibles or limited-risk assumptions that do not match reality.
Do small FIEs escape TP rules?
Documentation thresholds may ease burden, but arm’s-length principles and related-party disclosure can still apply. Size is not a free pass.
Where next?
TP keyword hub · Tax guide · Profit repatriation.
Primary authorities
Reviewed sources support orientation, not a fact-specific assessment.
Sources last checked:
Enterprise Income Tax Law / implementing regulationsNational People’s Congress
Individual Income Tax Law / implementing regulationsNational People’s Congress
VAT Law (effective 1 Jan 2026)www.npc.gov.cn
State Taxation Administration current notices/guidancewww.chinatax.gov.cn
