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On 13 July 2016, the State Administration of Taxation (SAT) finally released the long-awaited Bulletin 421 to revise the transfer pricing documentation requirements under Circular 22. By introducing the key recommendations under Action Plan 13 of the Base Erosion and Profit Shifting (BEPS) Project, Bulletin 42 will have a far-reaching impact on taxpayers.

In this alert, we will first look at who is affected by Bulletin 42. We will then discuss key provisions introduced under this bulletin and their implications on multinational companies (MNCs). Finally, we will provide some recommendations to MNCs on how to ensure compliance with the new transfer pricing documentation requirements and how to develop appropriate strategies to safeguard their tax interests in China.

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