On 18 October 2016 an State Administration of Taxation (SAT) Announcement on the Enhancement of Administration of Advance Pricing Arrangement (APA) (“Announcement 64”) was published on a public information platform. Announcement 64 replaces the current relevant regulations on APA administration as prescribed under Chapter 6 of the Implementation Measures for Special Tax Adjustments (Trial Implementation), Guoshuifa [2009] No.2 (“Circular 2”). It will come into effect beginning on 1 December 2016 and be applicable to APA applications that are not yet formally accepted by the tax authority before the announcement’s implementation.

Since the SAT released Circular 2’s revised version, Public Consultation Draft of Implementation Measures for Special Tax Adjustments (“Discussion Draft”), in September 2015, finance and tax professionals and entrepreneurs have been expecting significant revisions to the regulations for special tax adjustments. After the SAT issued the Announcement on the Enhancement of the Reporting of Related Party Transactions and Administration of Contemporaneous Documentation (“Announcement 42”) in June 2016, making the first step to localise Base Erosion and Profit Shifting (BEPS) action plans, we now finally witness the arrival of the updated APA administration requirements.