China’s State Administration of Taxation (SAT) issued Bulletin 46 on Clarifying Country-by-Country Reporting Related Issues and Subsequent Interpretation

; posted on
January 11th, 2018

The Multilateral Convention on Mutual Administrative Assistance in Tax Matters (Convention) has been launched officially in China since January 1, 2017. In order to ensure appropriate cohesion between the Convention and Bulletin 42 (*)  issued by the SAT in 2016, on 19 December 2017, the SAT issued Bulletin 46 to clarify that Article 7 and Article 8 stipulated in Bulletin 42 will not be applicable to the fiscal year (FY) 2016 Country-by-Country report (CbCR).


The SAT further made the following interpretation in relation to Bulletin 46:

Question: My company is the ultimate holding company of a multinational enterprise group, and my company is also a Chinese resident enterprise. What impact does Bulletin 46 have on my company?

Interpretation: In case the annual consolidated revenue of the group in the previous FY exceeds CNY 5.5 billion Yuan, your company must prepare and submit the CbCR to the relevant tax authorities if the requirements set forth in Bulletin 42 are met. In the meantime, according to the provisions of Bulletin 46, China's tax authorities will not conduct any exchange of information for the FY 2016 CbCR submitted by your company.

Question: My company is a foreign-invested enterprise in China, and multinational enterprise group to which my company belongs should prepare a country report in accordance with relevant country regulations. What impact will Bulletin 46 have on my company?

Interpretation: According to the provisions of Bulletin 46, China's tax authorities will not require your company to provide FY 2016 CbCR when conducting special tax investigations. However, if your company meet the requirement set forth in Bulletin 42 for preparing the transfer pricing contemporaneous documentation, your company should still prepare the related-party transfer pricing contemporaneous documentation and provide it upon request by the China’s tax authorities during a special tax investigation.


China signed the Convention on August 27, 2013 and also signed the Multilateral Competent Authority Agreement for the Automatic Exchange of Country-by-Country Reports (“CbC MCAA”) on May 12, 2016. However, China has not officially activated CbC MCAA for the FY 2016 CbCR, it means that China will not exchange the relevant CbCR information with other jurisdictions for FY 2016.

TPA Global's Observation

FY 2016 can be considered as a special year for filling of CbCR. In case the Chinese entity is the ultimate holding company of a multinational enterprise group, after completing its reporting obligation in China, it does not mean it has completed all its obligations. The group may face two options depending on the regulations of the country where the Group's overseas entities are located:

  1. complete local filing in accordance with the domestic laws of other countries;
  2. after comprehensively considered various types of situations, select another country as a Surrogate Parent Entity to fill FY 2016 CbCR.

China has already activated CbCR MCAA with France, Germany and the United Kingdom on July 31, 2017, this means that China will exchange information with the three countries for the FY 2017 CbCR. China is planning to activate exchange information system for CbCR with more countries, but the FY 2016 CbCR is not in the scope of exchange.

Appendix - Article 7 and Article 8 (Bulletin 42)

  1. Tax administrations may exchange the CbCR in accordance with tax treaties, agreements or arrangements that PRC has entered into.
  2. For an enterprise that is not required to file the CbC Runder the provisions of Article 5 of this Bulletin, tax administrations can request the enterprise to provide the CbCR during a special tax investigation if the MNE to which the enterprise belongs is required to prepare the CbCR in accordance with the relevant regulations of another country and one of the following conditions is met:
  • The MNE has not filed the CbCR to any other countries.
  • Although the MNE has filed the CbCR to another country, there is no mechanism in place to exchange CbCR between China and that country.
  • Although the MNE has filed the CbCR to another country, and there is a mechanism in place to exchange the CbCR between China and that country, the CbCR has not been successfully exchanged to China.


(*) Public Bulletin on Matters Regarding Refining the Filing of Related Party Transactions and Administration of Contemporaneous Transfer Pricing Documentation – Bulletin 42.

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