Speech at the 2nd China Tax Director Conference

On December 13-14 of 2012, I was invited to speak at the 2^nd China Tax Director Conference & GTS-Thomson Reuters China Tax Awards. This event is the largest and more influential tax conference in China which attracted high-level tax directors and professionals from all over China. It is an excellent platform for tax professionals to share their practical experience on new technical developments, tax management, talent management, cooperation with china tax authorities etc. Corporate trainings, whether external conference like this or internal / on-the-job training, are critical to help the tax professionals be on top of the latest developments. Here is the link to the conference: http://gts.goldenfinance.com.cn/20121213/en/index.html

 

Jing Nealis at the 2nd China Tax Director Conference & GTS-Thomson Reuters China Tax Awards

 

I shared my global tax experience and view on Risk Management for Transfer Pricing. In recent years, Chinese tax authority has been paying more and more attention to transfer pricing issues. In 2010, tax revenue generated from Transfer Pricing related investigations was approximately RMB 3 billion. In 2011, the tax revenue generated from anti-avoidance related adjustments was as high as RMB 27 billion in China. In addition to the traditional buy-sell related party transactions, the tax authorities are putting more effort into areas around intangible property transfer, equity transfer and thin capitalization etc. For tax VPs and Directors, Transfer Pricing Risk Management is becoming more and more important!

 

From my experience, I think the rules of the road for Transfer Pricing Risk Managements are:

1. Fully understand your company’s business model including the risk, function and assets of the relevant subsidiaries and allocate the profits accordingly.
2. Diligently prepare all the internal legal documents related to the TP arrangement.
3. Gather the market and industry information.
4. Carefully prepare the Transfer Pricing documentation.
5. Periodically assess the Transfer Pricing risk and take actions to reduce the risk.
6. Effectively communicate with the local tax authority about your company’s business model and relevant information.

The rapidly changing Chinese tax and regulatory environment requires companies to react fast and manage their risk appropriately. The Global Tax Director position is becoming more and more important for Chinese multinational companies and CFOs. As a global tax director, I face various challenges while managing the tax issues across three regions – North America, Europe, and Asia Pacific. My goal is to make the tax function a value-added department and a contributor to the overall corporate strategies.

 

I look forward to the challenges ahead!