China’s advanced pricing arrangements Foreign investments and operations in China have grown dramatically in the past decade. The government of China has recently decided to administer ‘advanced pricing arrangements’

(APAs) for multinationals operating in China. Its first APA annual report (2009) (http://www.

chinatax.gov.cn/n8136506/n8136608/n9947993/n9948014/n10517889.files/n10518029.

pdf) has extensive information and statistics about its APA policy and current APAs.

Required:

You are a financial manager within a European electronics firm that is planning to expand its manufacturing operations in China. Review China’s 2009 APA Annual report and prepare a 15 minute presentation on the APA policy and its implications for your firm’s transfer pricing system, as it would apply to its Chinese manufacturing operations.

(Note: Several large, international accounting firms have prepared summaries of China’s APA 2009 annual report. You may refer to these, but do not simply paraphrase or copy their analyses.)