Editing Transfer pricing (section)

===Documentation===
Under the 2009 Circular, taxpayers must disclose related party transactions when filing tax returns.<ref>China Circular 2 Art. 11.</ref>  In addition, the circular provides for a three-tier set of documentation and reporting standards, based on the aggregate amount of intercompany transactions.  Taxpayers affected by the rules who engaged in intercompany transactions under RMB 20 million for the year were generally exempted from reporting, documentation, and penalties.  Those with transactions exceeding RMB 200 million generally were required to complete transfer pricing studies in advance of filing tax returns.<ref>China Circular 2 Art. 13-20.</ref>  For taxpayers in the top tier, documentation must include a comparability analysis and justification for the transfer pricing method chosen.<ref>China Circular 2 Art. 14 (iv) and (v).</ref>

The 2015 draft introduced an overhauled three-tiered standardized approach to transfer pricing documentation. The tiers vary in documentation content and include the master file, the local file, and the country-by-country report. The draft also requires companies involved with related-party service transactions, cost sharing agreements or thin capitalization to submit a so-called "Special File."<ref name=":0" />