[Description]

In accordance with relevant provisions of applicable tax treaty between China and another state, the State Administration of Taxation ("SAT") may request initiation of a mutual agreement procedure ("MAP") based on the application by an enterprise or the request from the competent tax authority of the other contracting state, to launch consultation or negotiation with the competent tax authority of the other contracting state to avoid or eliminate double taxation caused by special tax adjustment matters.

A MAP involves:

(1) negotiation and signature of bilateral or multilateral advance pricing arrangements

(2) consultation and negotiation concerning the other contracting state's corresponding adjustments arising from one contracting state's special tax investigation adjustments.

[Materials Required]

[Application Method]

Submission of an application in writing to SAT.

[Time Limit]

1. For Taxpayers

To apply for initiation of a MAP, an enterprise shall submit an Application Form for Initiation of Mutual Agreement Procedure for Special Tax Adjustments and statements on special tax adjustment matters in writing to SAT. In case of submission in person, the date of submission is the date of application; and in case of submission by mail, the date on which SAT receives the application materials is the date of application.

2. For Tax Authorities

SAT shall notify the relevant provincial tax authority in writing of its decision to initiate, suspend or terminate a MAP. The competent tax authority in charge of special tax adjustments shall serve the applying enterprise a Tax Matter Notice with respect to initiation, suspension or termination of the MAP within 15 working days after the date on which it receives the written notice.

After signature of a mutual agreement between SAT and the competent authority of the other contracting state, SAT shall notify the relevant provincial tax authority in writing, with the mutual agreement attached. The competent tax authority in charge of special tax adjustments shall serve the applying enterprise a Tax Matter Notice with the mutual agreement attached within 15 working days after the date on which it receives the written notice.

[Result]

A Tax Matter Notice will be given by the tax authorities. Where a mutual agreement is entered into by SAT and the competent authority of the other contracting state, the mutual agreement will be attached to the notice.

[Notice to Taxpayers]

1. Taxpayers are responsible for the authenticity and legality of the materials they submit.

2. When a MAP is underway, tax authorities may request more materials from the applying enterprise. Such materials should be submitted within the prescribed time limit.

3. SAT may decline the application by an enterprise or the request from a competent tax authority of the other contracting state, if:

(1) the enterprise or its related party is not a tax resident of either of the contracting states;

(2) the application or request does not relate to a matter warranting special tax adjustments;

(3) the application or request manifestly lacks factual or legal basis;

(4) the application is not in line with the provisions of the applicable tax treaty; or

4. SAT may suspend a MAP, if:

(1) the applying enterprise applies for suspension of the MAP;

(2) the competent tax authority of the other contracting state of the applicable tax treaty requests suspension of the MAP;

(3) the application must be assessed on the basis of the result of the investigation adjustments of another enterprise, but the investigation adjustment procedure of such enterprise is still underway; or

(4) there is other circumstances which cause the MAP to be suspended.

5. SAT may terminate a MAP, if:

(1) the enterprise or its related party fails to provide necessary information related to the case or provides false or incomplete information or refuses to cooperate in any other ways;

(2) the applying enterprise applies for revocation or termination of the MAP;

(3) the competent tax authority of the other contracting state of the applicable tax treaty revokes or terminates the MAP; or

(4) there is other circumstances which cause the MAP to be terminated.

6. When filing an application for mutual agreement to SAT pursuant to the Public Notice of the State Administration of Taxation Regarding Special Tax Investigation Adjustments and Mutual Agreement Procedures (SAT Public Notice [2017] No. 6), an applying enterprise should submit materials in both Chinese and English. The materials that the applying enterprise submits to the competent tax authorities of both of the contracting states of the applicable tax treaty should be consistent.

7. Addresses of taxpayer service halls and the website of e-tax bureau are available on the web portals of tax authorities or by dialing the (86-0755) 12366 tax service hotline.

[Charge]

Free of charge

(Note: The text above is a translation of the Chinese version for reference only. In case of any discrepancy between the two versions, the original published Chinese version shall prevail.)