SAT’s Liao Tizhong emphasises China’s commitment to developing its transfer pricing regime

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

SAT’s Liao Tizhong emphasises China’s commitment to developing its transfer pricing regime

Liao Tizhong, deputy director general of international taxation in the State Administration of Taxation (SAT) of the People’s Republic of China, has emphasised the government’s commitment to developing its transfer pricing system in an interview with TPWeek, including setting-up a separate division for the administration of offshore income.

sat150.gif

The official has spoken at length with TPWeek about China’s views on transfer pricing, such as where it stands on location specific advantages (LSA); how it feels about the OECD’s transfer pricing guidance; and the evolution of dispute resolution in the country.

The interview, which will be published in two parts, reveals the differences between China and the OECD. In particular, he went into great detail about LSAs, giving taxpayers a framework for calculating their cost in China.

Some taxpayers do not like to admit that location specific advantages exist: “I firmly believe that location savings do not give rise to an intangible that should be rewarded through transfer pricing”, said one European head of tax.

However, Liao said: “LSA is not an arm’s-length price issue, but it is there, like it or not. The world has to take it seriously. China does apply LSAs in both transfer pricing investigations and advance pricing agreements and is happy to meet understanding and acceptance by both taxpayers and competent authority counterparts.”

The official also spoke about how China intends to form a separate division, within its tax administration to deal with offshore income,

“In the foreseeable future, a separate division for the administration of offshore income will be set up to cope holistically with residents deriving income from abroad,” said Liao. “SAT has branches at the provincial level, the city level and the county level. Correspondingly the International Taxation Department has offices in most of the branches.”

Part one of Liao’s interview is available on TPWeek now. Part two will be published on Mondat April 22.

Register for a free trial on TPWeek to read Liao’s insights into China’s transfer pricing regime, including useful advice about calculations.

You can also read about Vietnam’s transfer pricing developments, in an interview with Nguyen Quang Tien, the head of Vietnam’s transfer pricing department, within the General Department of Taxation (DGT), also published this week.

more across site & shared bottom lb ros

More from across our site

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article