Tax Returns of Related Party transaction in 2020

Subject of tax return
The resident enterprises that implement the collection of audit accounts and the non resident enterprises that set up institutions and places within the territory of China and declare and pay enterprise income tax according to the facts shall make related declaration if they meet one of the following two situations:
1. Having business dealings with its related parties during the year.
2. There is no business contact with its related parties in the year, but the Country-by-Country Report report is required to be submitted in accordance with Article 5 of Announcement No. 42.
An enterprise shall determine whether to fill in 22 forms one by one according to its actual business situation, that is, after entering the declaration interface through the e-tax Bureau, in addition to the three forms in the basic information section, other forms shall be filled in according to the actual business situation.
 It is important that taxpayers be required to carefully evaluate, at or before the time of filing a tax return, their own compliance with the applicable transfer pricing rules.
 tax administrations can require that transfer pricing Documentation requirements be satisfied on a contemporaneous basis. This would mean that the documentation would be prepared at the time of the transaction, or in any event, no later than the time of completing and filing the tax return for the fiscal year in which the transaction takes place.
A three-tiered approach to transfer pricing documentation.master file、local file、Country-by-Country Report.
1. Enterprises meeting one of the following conditions shall prepare master file:
(1)  global business operations with related party occurred in the year, and the enterprise group of the ultimate holding enterprise that consolidated the financial statements of the enterprise has prepared the master file.
(2) The total amount of related party transactions in the year exceeded 1 billion yuan.
2.Enterprises that meet one of the following conditions for the amount of annual related party transactions shall prepare local file:
(1) The transfer amount of the ownership of tangible assets (the processing business of supplied materials is calculated according to the annual import and export customs declaration price) is more than 200 million yuan.
(2) The transfer amount of financial assets exceeds 100 million yuan.
(3) The transfer amount of ownership of intangible assets is more than 100 million yuan.
(4) The total amount of other related transactions exceeds 40 million yuan.
In addition, the enterprise shall maintain a reasonable profit level when it is engaged in the single production business such as processing with supplied materials or processing with imported materials, or in the business of distribution and contract research and development. In the event of a loss, local file should be prepared for the loss year.
3.Enterprises that meet one of the following conditions shall prepare corresponding special matters documents:
(1) Where Cost contribution arrangement(CCA) entry is signed or executed, the special matters document of the CCA shall be prepared.
(2) If the ratio of related debt to capital exceeds the standard ratio and it needs to be explained that it is in line with the principle of independent transaction, special matters documents on Thin Capitalization should be prepared.