Direct answer

China’s transfer-pricing rules require related-party transactions to follow the arm’s-length principle and support the pricing with appropriate reporting, documentation and eviden…

The compliance question depends on the transaction type, related-party relationship, amounts/thresholds, functions/assets/risks and any applicable documentation exemptions or special rules.

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
How does the matter involve related-party relationship?
This operating fact can change the applicable legal route, evidence and next step.
Transaction type/value
How does the matter involve transaction type/value?
This operating fact can change the applicable legal route, evidence and next step.
Functions/assets/risks
How does the matter involve functions/assets/risks?
This operating fact can change the applicable legal route, evidence and next step.
Pricing method
How does the matter involve pricing method?
This operating fact can change the applicable legal route, evidence and next step.
Documentation/reporting threshold
How does the matter involve documentation/reporting threshold?
This operating fact can change the applicable legal route, evidence and next step.
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 transaction scheduleInclude this in the compact fact file for review.
02Intercompany agreementsInclude this in the compact fact file for review.
03Functional analysisInclude this in the compact fact file for review.
04Benchmark/pricing supportInclude this in the compact fact file for review.
05Annual related-party forms/documentationInclude this in the compact fact file for review.
Common confusions

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