Editing Transfer pricing (section)

===General principles===
Chinese transfer pricing rules apply to transactions between a Chinese business and domestic and foreign related parties.  A related party includes enterprises meeting one of eight different tests, including 25% equity ownership in common, overlapping boards or management, significant debt holdings, and other tests.  Transactions subject to the guidelines include most sorts of dealings businesses may have with one another.<ref>China Circular 2 Art. 9-10.</ref>

The Circular instructs field examiners to review taxpayer's comparability and method analyses.  The method of analyzing comparability and what factors are to be considered varies slightly by type of transfer pricing analysis method.  The guidelines for CUP include specific functions and risks to be analyzed for each type of transaction (goods, rentals, licensing, financing, and services).  The guidelines for resale price, cost-plus, transactional net margin method, and profit split are short and very general.