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What is an arm's length royalty for the license of logistics software from a US parent to a related party distributor in China/Asia?

Relates to transfer pricing for multinational corporations operating in different countries and tax jurisdictions.
Domestic & International Tax Planning Transfer Pricing
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Tax Professional Answers

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Sushil Rungta
An arm's length pricing is determined by taking into consideration how and under what terms unrelated parties would structure their transaction under given circumstances. Usually, a survey is taken of how similarly situated companies determine their prices for sales to unrelated parties and the pricing structure between related parties should be structured similarly.
Leave a Comment 482 weeks ago

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Paul Qu
In China, in principle, the tax authorities will judge it based on the business substance, the industry benchmark and the company's global TP policy. It will be determined whether it is an arm's length on the royalty charged, etc. Hopefully my answer will be helpful to your inquiries. Very sorry to the delay since I have not been accessing this due to the local reason. Paul

P.S. I can be reached at paul.qu@cn.pwc.com
Leave a Comment 482 weeks ago

 

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