Member Meeting: “Transfer Pricing in China and the Tax Case of AVK Group”

At the event, the 30 participants had the enjoyment of listening to three presentations.

The first presentation was given by Niels A. Kjær, CEO of AVK Holding A/S. Here he first welcomed the participants and then started out by introducing them to AVK in China. They established their first facilities in 2001 and they currently have 8 factories, 3 sales companies and 460 employees. Furthermore Mr. Kjær also introduced some of the cultural issues which AVK has experienced in China and how they have dealt with these.

Hereafter Jacob Kjær, General Counsel at AVK Holding A/S introduced the participants at the event to the “Tax Case” of AVK Group. The Tax Case began in 2005 and first settled in December 2009. The Chinese tax authorities stipulated that the transfer prices of AVK China were too low, resulting in inadequate tax payments. The presenter shared AVK’s experience with the attendants on how they solved and got the case settled with minimal damage to their operations in China. Among the advice to other companies based on this experience, Jacob Kjær mentioned the importance of having regular contact to local tax authorities and treating them respectfully.

The last presentation of the day on was given by Kasper Toftemark, TP Partner and Nanchun He, TP Consultant from Deloitte. In their presentation they introduced and elaborated on several issues concerning transfer pricing in China, such as, tax audits, focus areas of authorities, tax adjustment, transfer pricing documentation, tax incentives and cultural aspects.