Research & Analysis

MNCs are now faced with a particularly stressful situation. As China’s economy is starting to slow, foreign companies are reassessing their footprint in China – and many have realized they no longer need the facilities, people, or partners they had. However, MNCs are finding that the broader regulatory climate and the psychology of laborers are shifting, making it difficult to safely restructure operations and prevent a labor or commercial disputes.

Transfer pricing—the price charged for intercompany transactions between entities in different tax jurisdictions—can be used to shift funds within a multinational corporation (MNC), and serves as an effective means to manage a firm’s finances.

Hailed as China’s most significant tax reform in more than two decades, the value-added tax (VAT) was comprehensively implemented as the country’s only indirect tax in 2016, effectively replacing the business tax (BT). The reform is part of Beijing’s efforts to restructure the Chinese economy from one driven by labor-intensive manufacturing to one that is service-oriented by easing the tax burden on service industries.

In recent years, China has increased its efforts toward combating high levels of environmental pollution, a result of the country’s accelerated economic growth. In 2012, China declared war on pollution, and put aside RMB 3.7 trillion for the battle; more than half of the funds were reserved for combating water pollution.

A total of RMB 423.3 billion was spent on tourism during this year’s Chinese New Year holiday period, a 15.9 percent increase from last year according to the National Tourism Administration. As part of a seven percent increase in outbound tourism, about 6.15 million Chinese nationals took overseas trips.