If I set up one new company in Taiwan and the other one in Beijing at the same time, I am not sure whether any risks might happen on the trade between the two companies. There is one issue to aware, which is transferring pricing, a taxation term which I am not familiar with.
Transfer pricing usually occurs among associate enterprises, resulting in decrease of a nation's tax revenue. There are many complex concepts and operations on this issue. Although I thought of this benefit as well, the motive of starting two companies in different places stem from the high criteria of capital amount of a Joint Venture company, the only form that 2 Taiwanese and 1 Chinese can invest in the Mainland China.
Although transfer pricing and Advance Pricing Agreement are not easy subject for me, I found they are quite interesting. If I do not try to start my own company, I would never encounter this issue, and, from my work, I would never learn something new and similar to it.
Related Article:
Tax Co-operation in an International Setting (by Chinese scholar)
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