Although, the arm’s length principle in essence still is the driving force for analyzing intercompany transactions, how we apply that has changed in important ways. We are now required to follow a holistic approach in the form of Value Chain Analysis (VCA) for the multinational group before we could firmly say what arm’s profits each entity in the group should be earning.
VCA has become a burning topic for discussion after the publication of the final report on BEPS Action Plan 13 in 2015 and subsequent notifications by governments (especially the Chinese government which is set a deadline of 30th June to file VCA) on the extent of information to be included in VCA, such as disclosure of profits contributed by each entity in the group in the value chain along with their financials.
In this webinar, we will examine what level of analysis is required to be performed on value chain to satisfy the new Chinese transfer pricing requirements. We will also delve into the extent of disclosures to be made and the documentation to be maintained by a multinational in China in reference to VCA, by using various practical scenarios.